By Jae Hur
Oct. 3 (Bloomberg) -- Corn climbed for the first time in seventh days amid speculation prices at a nine-month low and falling shipping costs may lure overseas buyers. Soybeans fell.
Corn dropped 16 percent this week before today's gain as the dollar reached a one-year high yesterday against a basket of six currencies including the euro and yen. Corn's 14-day relative strength index, a gauge of momentum, fell below 30 yesterday, signaling prices may rise.
``The grain price fell too much and too fast,'' said Kenji Kobayashi, an analyst at Kanetsu Asset Management Co. in Tokyo. With tumbling freight costs, current prices would prompt overseas buyers seek the grain, he said.
Turmoil in global financial markets has driven investors to take cash out of commodities, said Kobayashi. Reuters/Jefferies CRB Index of 19 raw materials is down 9.9 percent this week, the most since at least 1956.
Weakening demand for materials has led to a drop in freight costs. The Baltic Dry Index, a measure of shipping costs for commodities, fell 1.2 percent to 2,990 points, according to the Baltic Exchange in London. That's the first time the index has fallen below 3,000 points since July 2006.
Corn for December delivery was up 2.5 cents, or 0.6 percent, at $4.565 a bushel at 12:05 p.m. Singapore time after gaining to $4.60 in after-hours electronic trading on the Chicago Board of Trade. The contract earlier touched $4.53, the lowest since Dec. 31. Futures have lost 43 percent from a June 27 peak of $7.9925.
Soybeans
Soybeans for November delivery fell 1.5 cents to $10.025 a bushel at 12:05 p.m. Singapore time after rising as high as $10.115. The contract yesterday touched $9.9225, the lowest since Nov. 1. The oilseed has fallen 14 percent this week and is down 39 percent from a record $16.3675 on July 3.
Wheat for December delivery was up 1.5 cents at $6.375 a bushel at 11:37 a.m. Singapore time after dropping 5 percent yesterday to $6.30, the lowest since Aug. 1, 2007.
The grain has declined 11 percent this week, the most since March 21, and the sixth straight weekly loss. The price was down 53 percent an all-time high of $13.495 on Feb. 27.
The dollar was at $1.3862 per euro from $1.3819 yesterday, when it touched a one-year high of $1.3748.
To contact the reporter for this story: Jae Hur in Singapore at jhur1@bloomberg.net
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Friday, October 3, 2008
Rubber Slumps to 13-Month Low on Concern Tire Demand to Decline
By Aya Takada
Oct. 3 (Bloomberg) -- Natural rubber futures dropped to their lowest in more than 13 months in Tokyo on concern slumping car sales may weaken demand for the raw material used to make tires.
The March contract fell as much as 5.5 percent to the lowest since Aug. 22, 2007, heading for a fifth weekly loss. Bayerische Motoren Werke AG, Ford Motor Co. and Renault SA said yesterday a sales slump may last longer than manufacturers have anticipated.
``A slump in car sales may accelerate,'' Takaki Shigemoto, an analyst at Tokyo-based commodity broker Okachi & Co., said today by phone. ``Turmoil in financial markets is worsening the economic slowdown.''
The most-active contract fell 3.1 percent to 238.8 yen a kilogram ($2,272 a metric ton) on the Tokyo Commodity Exchange at the 11 a.m. local time break.
Prices have retreated 33 percent since reaching a 28-year high at 356.9 yen on June 30, when record oil prices spurred investors to buy commodities as an inflation hedge.
Auto markets won't recover until at least the middle of next year, BMW Chief Executive Officer Norbert Reithofer said yesterday at the Paris Motor Show. Ford CEO Alan Mulally said a recovery won't begin before 2010 and Renault boss Carlos Ghosn said the slowdown may last two years.
Slumping Sales
U.S. vehicle sales in September decreased for an 11th straight month, the longest slide in 17 years, as the credit crisis hurt consumption. Overall sales of new cars and light trucks dropped 27 percent last month, Autodata said Oct. 1. It was the biggest monthly drop since January 1991, according to Ward's AutoInfoBank in Southfield, Michigan.
Rubber futures also declined as Japan's currency climbed against the dollar, making yen-denominated contracts less attractive to investors, Okachi's Shigemoto said.
The futures contract often moves in the opposite direction to the yen as rubber trades globally in dollars. The U.S. currency fell for the third day against the yen on speculation the U.S. economy will weaken regardless of whether lawmakers pass a bill to buy troubled assets from banks in a vote today.
The U.S. Senate approved the $700 billion bank bailout plan earlier this week, and the package today goes to the House of Representatives, which rejected an earlier version of the measure.
The Shanghai Futures Exchange, which trades rubber futures in yuan, is closed this week for a national holiday in China.
To contact the reporter on this story: Aya Takada in Tokyo atakada2@bloomberg.net
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Oct. 3 (Bloomberg) -- Natural rubber futures dropped to their lowest in more than 13 months in Tokyo on concern slumping car sales may weaken demand for the raw material used to make tires.
The March contract fell as much as 5.5 percent to the lowest since Aug. 22, 2007, heading for a fifth weekly loss. Bayerische Motoren Werke AG, Ford Motor Co. and Renault SA said yesterday a sales slump may last longer than manufacturers have anticipated.
``A slump in car sales may accelerate,'' Takaki Shigemoto, an analyst at Tokyo-based commodity broker Okachi & Co., said today by phone. ``Turmoil in financial markets is worsening the economic slowdown.''
The most-active contract fell 3.1 percent to 238.8 yen a kilogram ($2,272 a metric ton) on the Tokyo Commodity Exchange at the 11 a.m. local time break.
Prices have retreated 33 percent since reaching a 28-year high at 356.9 yen on June 30, when record oil prices spurred investors to buy commodities as an inflation hedge.
Auto markets won't recover until at least the middle of next year, BMW Chief Executive Officer Norbert Reithofer said yesterday at the Paris Motor Show. Ford CEO Alan Mulally said a recovery won't begin before 2010 and Renault boss Carlos Ghosn said the slowdown may last two years.
Slumping Sales
U.S. vehicle sales in September decreased for an 11th straight month, the longest slide in 17 years, as the credit crisis hurt consumption. Overall sales of new cars and light trucks dropped 27 percent last month, Autodata said Oct. 1. It was the biggest monthly drop since January 1991, according to Ward's AutoInfoBank in Southfield, Michigan.
Rubber futures also declined as Japan's currency climbed against the dollar, making yen-denominated contracts less attractive to investors, Okachi's Shigemoto said.
The futures contract often moves in the opposite direction to the yen as rubber trades globally in dollars. The U.S. currency fell for the third day against the yen on speculation the U.S. economy will weaken regardless of whether lawmakers pass a bill to buy troubled assets from banks in a vote today.
The U.S. Senate approved the $700 billion bank bailout plan earlier this week, and the package today goes to the House of Representatives, which rejected an earlier version of the measure.
The Shanghai Futures Exchange, which trades rubber futures in yuan, is closed this week for a national holiday in China.
To contact the reporter on this story: Aya Takada in Tokyo atakada2@bloomberg.net
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Gold Heading for Weekly Loss on Dollar Rally, Slower Growth
By Feiwen Rong
Oct. 3 (Bloomberg) -- Gold is headed for its first weekly decline in three weeks as the dollar's rally reduced investor demand for bullion and on signs the global economy is slowing.
The dollar rose to a 13-month high against the euro after European Central Bank President Jean-Claude Trichet said policy makers discussed cutting interest rates. Crude oil fell below $94 a barrel, copper dropped to a 19-month low, and lumber futures fell to 17-year low after a report showed orders to U.S. factories fell the most in almost two years in August.
Gold dropped ``with selling related to the firmer U.S. dollar and lower oil prices outweighing safe-haven related demand,'' David Moore, commodity strategist at Commonwealth Bank of Australia in Sydney, said in a report today.
Gold for immediate delivery rose 20 cents to $836.60 an ounce at 9:50 a.m. in Singapore. Bullion is headed for its first weekly decline in three weeks. Silver for immediate delivery added 0.7 percent at $10.92 an ounce.
The European currency has declined 5.5 percent against the dollar this week, the biggest four-day drop since the currency's debut in 1999. It last traded at $1.3852, from $1.3819 yesterday, when it touched $1.3748, the weakest since September 2007.
Traders increased bets that the European Central Bank will cut the main refinancing rate in coming months after the ECB yesterday held it at a seven-year high of 4.25 percent.
December-delivery gold fell 0.4 percent to $841 an ounce in after-hours electronic trading on the Comex division of the New York Mercantile Exchange at 9:50 a.m. in Singapore.
Gold for August delivery tumbled 4 percent to 2,804 yen a gram ($834 an ounce) on the Tokyo Commodity Exchange at 10:50 a.m. local time.
To contact the reporter on this story: Feiwen Rong in Singapore at frong2@bloomberg.net
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Oct. 3 (Bloomberg) -- Gold is headed for its first weekly decline in three weeks as the dollar's rally reduced investor demand for bullion and on signs the global economy is slowing.
The dollar rose to a 13-month high against the euro after European Central Bank President Jean-Claude Trichet said policy makers discussed cutting interest rates. Crude oil fell below $94 a barrel, copper dropped to a 19-month low, and lumber futures fell to 17-year low after a report showed orders to U.S. factories fell the most in almost two years in August.
Gold dropped ``with selling related to the firmer U.S. dollar and lower oil prices outweighing safe-haven related demand,'' David Moore, commodity strategist at Commonwealth Bank of Australia in Sydney, said in a report today.
Gold for immediate delivery rose 20 cents to $836.60 an ounce at 9:50 a.m. in Singapore. Bullion is headed for its first weekly decline in three weeks. Silver for immediate delivery added 0.7 percent at $10.92 an ounce.
The European currency has declined 5.5 percent against the dollar this week, the biggest four-day drop since the currency's debut in 1999. It last traded at $1.3852, from $1.3819 yesterday, when it touched $1.3748, the weakest since September 2007.
Traders increased bets that the European Central Bank will cut the main refinancing rate in coming months after the ECB yesterday held it at a seven-year high of 4.25 percent.
December-delivery gold fell 0.4 percent to $841 an ounce in after-hours electronic trading on the Comex division of the New York Mercantile Exchange at 9:50 a.m. in Singapore.
Gold for August delivery tumbled 4 percent to 2,804 yen a gram ($834 an ounce) on the Tokyo Commodity Exchange at 10:50 a.m. local time.
To contact the reporter on this story: Feiwen Rong in Singapore at frong2@bloomberg.net
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Palm Oil Declines to 19-Month Low Amid Worsening Demand Outlook
By Claire Leow
Oct. 3 (Bloomberg) -- Palm oil futures plunged to a 19-month low, mirroring a slump in commodities, on concern a proposed $700 million U.S. financial rescue plan won't avert a global economic slowdown as credit costs surge.
December-delivery palm oil declined as much as 6.5 percent to 1,954 ringgit ($562) a metric ton on the Malaysia Derivatives Exchange, the lowest since March 15, 2007. Futures have fallen below 2,000 ringgit twice this week.
The Reuters/Jefferies CRB Index of 19 commodities has fallen 9.9 percent this week, the largest drop since at least 1956, as a worsening global growth outlook sent prices for crude oil, corn, soybeans, nickel and gold tumbling from peaks reached this year.
``Recent Malaysian export data and a revision in EU biofuels policy amid falling crude oil prices suggest that the pressure on crude palm oil prices is likely to persist,'' Sunaina Dhanuka, an analyst at Macquarie in Kuala Lumpur said today.
On Sept. 11, the EU Industry & Energy Committee lowered its target for 5.75 percent of renewable energy sources in transport fuel by 2010 to 5 percent by 2015, a move that may crimp demand for palm oil for use in biofuels by 2 million tons a year for the next two years, Dhanuka said. The new target is to be voted on by lawmakers on Oct. 8.
Vegetable oils made from soybeans, corn, rapeseeds and oil palms, used mostly in cooking, often track crude oil prices as they can be used to make alternative fuels. Oil futures in New York have slumped 13 percent this week to $93.29 a barrel.
Malaysia's palm oil exports fell 19 percent in September to 1.2 million tons compared with the previous month, independent surveyor Intertek said today. Indonesia and Malaysia account for 90 percent of the world's palm oil production.
Plantation Stocks
Stocks of plantation companies and edible-oil refiners fell. Wilmar International Ltd., the world's biggest palm oil trader which supplies almost half of China's edible oils, dropped as much as 3.95 percent to S$2.43 in Singapore. The stock has lost 11 percent of its value this week.
Indofood Agri Resources Ltd., the Singapore-listed palm oil unit of Indonesia's biggest noodle maker, dropped as much as 7.8 percent to 70.5 Singapore cents, extending this week's loss to 13 percent. It was at 71 Singapore cents at 11:13 a.m. local time.
Golden Agri Resources Ltd., owner of the world's second- largest oil-palm plantation, plunged as much as 6.1 percent to 31 cents, and has lost 15.1 percent this week. It was at 31 Singapore cents at 11:15 a.m. local time.
To contact the reporter on this story: Claire Leow in Singapore at cleow@bloomberg.net
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Oct. 3 (Bloomberg) -- Palm oil futures plunged to a 19-month low, mirroring a slump in commodities, on concern a proposed $700 million U.S. financial rescue plan won't avert a global economic slowdown as credit costs surge.
December-delivery palm oil declined as much as 6.5 percent to 1,954 ringgit ($562) a metric ton on the Malaysia Derivatives Exchange, the lowest since March 15, 2007. Futures have fallen below 2,000 ringgit twice this week.
The Reuters/Jefferies CRB Index of 19 commodities has fallen 9.9 percent this week, the largest drop since at least 1956, as a worsening global growth outlook sent prices for crude oil, corn, soybeans, nickel and gold tumbling from peaks reached this year.
``Recent Malaysian export data and a revision in EU biofuels policy amid falling crude oil prices suggest that the pressure on crude palm oil prices is likely to persist,'' Sunaina Dhanuka, an analyst at Macquarie in Kuala Lumpur said today.
On Sept. 11, the EU Industry & Energy Committee lowered its target for 5.75 percent of renewable energy sources in transport fuel by 2010 to 5 percent by 2015, a move that may crimp demand for palm oil for use in biofuels by 2 million tons a year for the next two years, Dhanuka said. The new target is to be voted on by lawmakers on Oct. 8.
Vegetable oils made from soybeans, corn, rapeseeds and oil palms, used mostly in cooking, often track crude oil prices as they can be used to make alternative fuels. Oil futures in New York have slumped 13 percent this week to $93.29 a barrel.
Malaysia's palm oil exports fell 19 percent in September to 1.2 million tons compared with the previous month, independent surveyor Intertek said today. Indonesia and Malaysia account for 90 percent of the world's palm oil production.
Plantation Stocks
Stocks of plantation companies and edible-oil refiners fell. Wilmar International Ltd., the world's biggest palm oil trader which supplies almost half of China's edible oils, dropped as much as 3.95 percent to S$2.43 in Singapore. The stock has lost 11 percent of its value this week.
Indofood Agri Resources Ltd., the Singapore-listed palm oil unit of Indonesia's biggest noodle maker, dropped as much as 7.8 percent to 70.5 Singapore cents, extending this week's loss to 13 percent. It was at 71 Singapore cents at 11:13 a.m. local time.
Golden Agri Resources Ltd., owner of the world's second- largest oil-palm plantation, plunged as much as 6.1 percent to 31 cents, and has lost 15.1 percent this week. It was at 31 Singapore cents at 11:15 a.m. local time.
To contact the reporter on this story: Claire Leow in Singapore at cleow@bloomberg.net
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Oil Heads for Biggest Weekly Drop Since 2004 on Slowing Demand
By Christian Schmollinger
Enlarge Image/Details
Oct. 3 (Bloomberg) -- Crude oil fell for a third day in New York, poised for the biggest weekly drop since 2004, on signs the U.S. is slipping into a recession, reducing fuel demand in the world's largest energy user.
Oil has declined 13 percent this week as higher borrowing costs and reports showing a worsening economy spurred skepticism that the U.S. government's $700 billion bank-bailout plan will stimulate growth. The number of futures held by traders in New York dropped to the lowest in more than two years as U.S. factory orders fell 4 percent, the most since 2006.
``It's difficult to see any bright side for oil or other commodities markets,'' said Tetsu Emori, a fund manager at Astmax Ltd. in Tokyo. ``People don't want to leave their money in commodities.''
Crude oil for November delivery fell as much as $1.16, or 1.2 percent, to $92.81 a barrel in after-hours electronic trading on the New York Mercantile Exchange. It was at $93 a barrel at 2:34 p.m. Singapore time.
Yesterday, futures dropped $4.56, or 4.6 percent, to $93.97 a barrel in New York. Oil has declined 37 percent from its record $147.27 on July 11. The weekly drop is the biggest since Dec. 3, 2004.
Commodities, as measured by the Reuters/Jefferies CRB Index of 19 raw materials, have tumbled 9.9 percent this week, the most since at least 1956. The index has slumped 31 percent from a record on July 3.
U.S. fuel use over the past four weeks averaged 19 million barrels a day, the weakest since October 2001, an Energy Department report showed earlier this week. Crude-oil and gasoline inventories increased last week, the department said.
House to Vote
The U.S. Senate passed a $700 billion financial-market rescue package loaded with inducements for the House of Representatives to approve the measure. The House rejected a version on Sept. 29. The legislative body will reconsider the Senate's bill today.
The U.S. may fall into a recession as the financial rout deepens, the International Monetary Fund said in its most pessimistic outlook for the world's largest economy since the credit crisis began last year.
``Even if the financial bailout plan might be passed, it won't be helpful because it won't stem the fall,'' Astmax's Emori said.
Brent crude oil for November settlement declined as much as 90 cents, or 1 percent, to $89.66 a barrel on London's ICE Futures Europe exchange. It was at $89.70 a barrel at 2:35 p.m. Singapore time. The contract declined $4.77, or 5 percent, to settle at $90.56 a barrel yesterday, the lowest since Sept. 16.
To contact the reporter on this story: Christian Schmollinger in Singapore at christian.s@bloomberg.net.
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Enlarge Image/Details
Oct. 3 (Bloomberg) -- Crude oil fell for a third day in New York, poised for the biggest weekly drop since 2004, on signs the U.S. is slipping into a recession, reducing fuel demand in the world's largest energy user.
Oil has declined 13 percent this week as higher borrowing costs and reports showing a worsening economy spurred skepticism that the U.S. government's $700 billion bank-bailout plan will stimulate growth. The number of futures held by traders in New York dropped to the lowest in more than two years as U.S. factory orders fell 4 percent, the most since 2006.
``It's difficult to see any bright side for oil or other commodities markets,'' said Tetsu Emori, a fund manager at Astmax Ltd. in Tokyo. ``People don't want to leave their money in commodities.''
Crude oil for November delivery fell as much as $1.16, or 1.2 percent, to $92.81 a barrel in after-hours electronic trading on the New York Mercantile Exchange. It was at $93 a barrel at 2:34 p.m. Singapore time.
Yesterday, futures dropped $4.56, or 4.6 percent, to $93.97 a barrel in New York. Oil has declined 37 percent from its record $147.27 on July 11. The weekly drop is the biggest since Dec. 3, 2004.
Commodities, as measured by the Reuters/Jefferies CRB Index of 19 raw materials, have tumbled 9.9 percent this week, the most since at least 1956. The index has slumped 31 percent from a record on July 3.
U.S. fuel use over the past four weeks averaged 19 million barrels a day, the weakest since October 2001, an Energy Department report showed earlier this week. Crude-oil and gasoline inventories increased last week, the department said.
House to Vote
The U.S. Senate passed a $700 billion financial-market rescue package loaded with inducements for the House of Representatives to approve the measure. The House rejected a version on Sept. 29. The legislative body will reconsider the Senate's bill today.
The U.S. may fall into a recession as the financial rout deepens, the International Monetary Fund said in its most pessimistic outlook for the world's largest economy since the credit crisis began last year.
``Even if the financial bailout plan might be passed, it won't be helpful because it won't stem the fall,'' Astmax's Emori said.
Brent crude oil for November settlement declined as much as 90 cents, or 1 percent, to $89.66 a barrel on London's ICE Futures Europe exchange. It was at $89.70 a barrel at 2:35 p.m. Singapore time. The contract declined $4.77, or 5 percent, to settle at $90.56 a barrel yesterday, the lowest since Sept. 16.
To contact the reporter on this story: Christian Schmollinger in Singapore at christian.s@bloomberg.net.
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Copper Heads for Worst Week Since 1986 on Global Growth Concern
By Glenys Sim
Oct. 3 (Bloomberg) -- Copper headed for its worst week in more than 20 years on increasing concern that slower global economic growth may cut demand.
Copper fell for a fifth session yesterday, as the euro fell to a one-year low against the dollar after European Central Bank policymakers considered cutting rates. Commodity investors are also concerned the post-Olympics bounce in Chinese economic activity has been ``tepid at best'', according to Commonwealth Bank of Australia's David Moore.
Copper for delivery in three months fell as much as 0.5 percent to $5,860 a metric ton on the London Metal Exchange, and was little changed at $5,860 at 11:40 a.m. in Singapore. The metal used in wires and pipes slumped to $5,785 yesterday, the lowest since February 2007. It is down 14 percent for the week, the largest weekly drop since at least 1986.
December delivery copper on the Comex division of the New York Mercantile Exchange added 0.8 percent to $2.6475 a pound at the same time. China's markets are closed this week for holidays.
Labor disputes threatening to disrupt supply this week failed to stem the metal's losses.
Workers at Freeport-McMoRan Copper & Gold Inc.'s Cerro Verde unit yesterday began their second walkout of the year, union General Secretary Luis Castillo said in a telephone interview.
About 700 workers at Xstrata Plc's copper and zinc operations in Canada left their posts Oct. 1 after wage negotiations stalled.
The parties are negotiating wages and benefits and are not ``that far apart,'' Canadian Auto Workers negotiator Hemi Mitic said yesterday.
``Although the shorts are in control for now, ongoing critically low global stocks and endemic production problems suggest prices could turn very sharply if Chinese restocking materializes in the fourth quarter,'' Hussein Allidina, commodity research analyst at Morgan Stanley in New York said in an e- mailed report today.
Among other LME-traded metals, aluminum rose 0.2 percent to $2,305 a ton, zinc added 1 percent to $1,595, and lead gained 1.5 percent to $1,720. Nickel and tin had not traded.
To contact the reporter for this story: Glenys Sim in Singapore at gsim4@bloomberg.net
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Oct. 3 (Bloomberg) -- Copper headed for its worst week in more than 20 years on increasing concern that slower global economic growth may cut demand.
Copper fell for a fifth session yesterday, as the euro fell to a one-year low against the dollar after European Central Bank policymakers considered cutting rates. Commodity investors are also concerned the post-Olympics bounce in Chinese economic activity has been ``tepid at best'', according to Commonwealth Bank of Australia's David Moore.
Copper for delivery in three months fell as much as 0.5 percent to $5,860 a metric ton on the London Metal Exchange, and was little changed at $5,860 at 11:40 a.m. in Singapore. The metal used in wires and pipes slumped to $5,785 yesterday, the lowest since February 2007. It is down 14 percent for the week, the largest weekly drop since at least 1986.
December delivery copper on the Comex division of the New York Mercantile Exchange added 0.8 percent to $2.6475 a pound at the same time. China's markets are closed this week for holidays.
Labor disputes threatening to disrupt supply this week failed to stem the metal's losses.
Workers at Freeport-McMoRan Copper & Gold Inc.'s Cerro Verde unit yesterday began their second walkout of the year, union General Secretary Luis Castillo said in a telephone interview.
About 700 workers at Xstrata Plc's copper and zinc operations in Canada left their posts Oct. 1 after wage negotiations stalled.
The parties are negotiating wages and benefits and are not ``that far apart,'' Canadian Auto Workers negotiator Hemi Mitic said yesterday.
``Although the shorts are in control for now, ongoing critically low global stocks and endemic production problems suggest prices could turn very sharply if Chinese restocking materializes in the fourth quarter,'' Hussein Allidina, commodity research analyst at Morgan Stanley in New York said in an e- mailed report today.
Among other LME-traded metals, aluminum rose 0.2 percent to $2,305 a ton, zinc added 1 percent to $1,595, and lead gained 1.5 percent to $1,720. Nickel and tin had not traded.
To contact the reporter for this story: Glenys Sim in Singapore at gsim4@bloomberg.net
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Aberdeen Asset Buys Singapore's City Developments After Plunge
By Hanny Wan
Oct. 3 (Bloomberg) -- Aberdeen Asset Management Plc is using the slump in stock markets worldwide to buy City Developments Ltd., Singapore's second-largest property company, whose shares have plunged 44 percent this year.
``Twelve months ago, we were struggling to find value,'' Stephen Docherty, head of global equities at Scotland's largest independent money manager, told reporters in Hong Kong today. ``Now they're everywhere.''
The MSCI Asia Pacific Index has retreated 33 percent this year as global economies slowed and institutions posted almost $600 billion in losses and writedowns. Aberdeen hasn't owned U.S. banking stocks for five years, Docherty said.
A surge in market volatility and a contraction in credit led to the failures of Lehman Brothers Holdings Inc. and Washington Mutual Inc., the sale of Merrill Lynch & Co. to Bank of America Corp., and the nationalization of American International Group Inc.
The U.S. Senate on Oct. 1 passed a $700 billion financial- market rescue package loaded with inducements for the House of Representatives to approve the measure following its rejection of an earlier version.
Aberdeen manages $220 billion of assets worldwide. The firm, with an Asian head office in Singapore, has more than 130 employees in the region.
To contact the reporter on this story: Hanny Wan in Hong Kong at hwan3@bloomberg.net
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Oct. 3 (Bloomberg) -- Aberdeen Asset Management Plc is using the slump in stock markets worldwide to buy City Developments Ltd., Singapore's second-largest property company, whose shares have plunged 44 percent this year.
``Twelve months ago, we were struggling to find value,'' Stephen Docherty, head of global equities at Scotland's largest independent money manager, told reporters in Hong Kong today. ``Now they're everywhere.''
The MSCI Asia Pacific Index has retreated 33 percent this year as global economies slowed and institutions posted almost $600 billion in losses and writedowns. Aberdeen hasn't owned U.S. banking stocks for five years, Docherty said.
A surge in market volatility and a contraction in credit led to the failures of Lehman Brothers Holdings Inc. and Washington Mutual Inc., the sale of Merrill Lynch & Co. to Bank of America Corp., and the nationalization of American International Group Inc.
The U.S. Senate on Oct. 1 passed a $700 billion financial- market rescue package loaded with inducements for the House of Representatives to approve the measure following its rejection of an earlier version.
Aberdeen manages $220 billion of assets worldwide. The firm, with an Asian head office in Singapore, has more than 130 employees in the region.
To contact the reporter on this story: Hanny Wan in Hong Kong at hwan3@bloomberg.net
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Australia Stocks Fall on U.S. Growth Concern, Lower Commodities
By Shani Raja
Oct. 3 (Bloomberg) -- Australian stocks fell, led by mining companies, after commodities prices dropped as reports showing a weakening U.S. economy heightened concern a $700 billion bank bailout won't be enough to reverse the global economic slowdown.
BHP Billiton Ltd., the world's largest mining company, slipped to its lowest in almost 1 1/2 years as the Reuters/Jefferies CRB Index of 19 raw materials headed towards its biggest weekly drop in more than 50 years.
Babcock & Brown Ltd., a manager of infrastructure assets, tumbled 9 percent, while Australia & New Zealand Banking Group Ltd. dropped 2.7 percent as three-month bank lending rates climbed to the highest since January.
``The U.S. economy faces severe economic hardships over the next few years,'' said Hans Kunnen, head of investment market research in Sydney at Colonial First State Global Management, which manages about $128 billion. ``What the package does is save the system, it doesn't fix the system.''
The S&P/ASX 200 Index fell 2.3 percent to 4,653.40 at 2:25 p.m. in Sydney, taking its decline this year to 27 percent. Materials stocks on the benchmark dived 4.7 percent, the biggest decline among the 10 industry groups.
BHP lost A$1.51, or 4.8 percent to A$30.16. Rio Tinto Group, the world's third biggest mining company, dropped A$4.53, or 5 percent, to A$86.72.
Macarthur Coal Ltd., the world's biggest exporter of pulverized coal, lost 80 cents, or 8.1 percent, to A$9.10, the lowest since January, while Gloucester Coal Ltd. declined 87 cents, or 12 percent to A$6.39.
U.S. Concerns
Incitec Pivot Ltd., the world's second-largest explosives maker that's also the biggest fertilizer producer in Australia, dropped to its lowest since Nov. 21, 2007, falling 38 cents, or 8.2 percent, to A$4.27.
Babcock fell 18 cents, or 9 percent, to A$1.82. ANZ lost 52 cents, or 2.7 percent, to A$18.46.
U.S. initial jobless claims jumped to 497,000 in the week ended Sept. 27 from the previous week, the Labor Department yesterday said. Orders to U.S. factories dropped 4 percent in August, the biggest slump in almost two years, a separate report from the Commerce Department showed.
The following companies' shares rose or fell on the Australian stock exchange.
Platinum producers: Aquarius Platinum Ltd. (AQP AU), a producer of the metal in South Africa and Zimbabwe, plunged 68 cents, or 12 percent, to A$5.15, the lowest in more than two years. Platinum Australia Ltd. (PLA AU), owner of platinum mines in South Africa and Australia, fell 14 cents, or 8.7 percent, to A$1.42, the lowest since April 2007.
Platinum fell below $1,000 an ounce to the lowest since January 2006 and palladium plunged on signs of waning demand for the metals used in car parts as U.S. auto sales tumbled 27 percent in September.
Equinox Minerals Ltd. (EQN AU), the developer of Africa's largest copper mine, fell 23 cents, or 7.9 percent, to A$2.67, the lowest since May 2, 2007. The company said it signed an $80 million loan facility to meet its ``working capital requirements'' after delays to the start of the Lumwana copper project.
Gunns Ltd. (GNS AU), which is building a wood pulp mill in Australia's Tasmania state, surged 8 cents, or 6.9 percent, to A$1.31, the benchmark's biggest gainer. The company said its recent institutional offer allowed it to repay its extended working capital facility and a part of its debt facilities.
3D Oil Ltd. (TDO AU), an Australian oil and gas explorer, soared 1 cent, or 13 percent, to 13 cents. Director Peter Wilcox acquired 300,000 shares in the company worth A$37,589, according to a statement filed to the Australian stock exchange.
To contact the reporter on this story: Shani Raja in Sydney at sraja4@bloomberg.net
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Oct. 3 (Bloomberg) -- Australian stocks fell, led by mining companies, after commodities prices dropped as reports showing a weakening U.S. economy heightened concern a $700 billion bank bailout won't be enough to reverse the global economic slowdown.
BHP Billiton Ltd., the world's largest mining company, slipped to its lowest in almost 1 1/2 years as the Reuters/Jefferies CRB Index of 19 raw materials headed towards its biggest weekly drop in more than 50 years.
Babcock & Brown Ltd., a manager of infrastructure assets, tumbled 9 percent, while Australia & New Zealand Banking Group Ltd. dropped 2.7 percent as three-month bank lending rates climbed to the highest since January.
``The U.S. economy faces severe economic hardships over the next few years,'' said Hans Kunnen, head of investment market research in Sydney at Colonial First State Global Management, which manages about $128 billion. ``What the package does is save the system, it doesn't fix the system.''
The S&P/ASX 200 Index fell 2.3 percent to 4,653.40 at 2:25 p.m. in Sydney, taking its decline this year to 27 percent. Materials stocks on the benchmark dived 4.7 percent, the biggest decline among the 10 industry groups.
BHP lost A$1.51, or 4.8 percent to A$30.16. Rio Tinto Group, the world's third biggest mining company, dropped A$4.53, or 5 percent, to A$86.72.
Macarthur Coal Ltd., the world's biggest exporter of pulverized coal, lost 80 cents, or 8.1 percent, to A$9.10, the lowest since January, while Gloucester Coal Ltd. declined 87 cents, or 12 percent to A$6.39.
U.S. Concerns
Incitec Pivot Ltd., the world's second-largest explosives maker that's also the biggest fertilizer producer in Australia, dropped to its lowest since Nov. 21, 2007, falling 38 cents, or 8.2 percent, to A$4.27.
Babcock fell 18 cents, or 9 percent, to A$1.82. ANZ lost 52 cents, or 2.7 percent, to A$18.46.
U.S. initial jobless claims jumped to 497,000 in the week ended Sept. 27 from the previous week, the Labor Department yesterday said. Orders to U.S. factories dropped 4 percent in August, the biggest slump in almost two years, a separate report from the Commerce Department showed.
The following companies' shares rose or fell on the Australian stock exchange.
Platinum producers: Aquarius Platinum Ltd. (AQP AU), a producer of the metal in South Africa and Zimbabwe, plunged 68 cents, or 12 percent, to A$5.15, the lowest in more than two years. Platinum Australia Ltd. (PLA AU), owner of platinum mines in South Africa and Australia, fell 14 cents, or 8.7 percent, to A$1.42, the lowest since April 2007.
Platinum fell below $1,000 an ounce to the lowest since January 2006 and palladium plunged on signs of waning demand for the metals used in car parts as U.S. auto sales tumbled 27 percent in September.
Equinox Minerals Ltd. (EQN AU), the developer of Africa's largest copper mine, fell 23 cents, or 7.9 percent, to A$2.67, the lowest since May 2, 2007. The company said it signed an $80 million loan facility to meet its ``working capital requirements'' after delays to the start of the Lumwana copper project.
Gunns Ltd. (GNS AU), which is building a wood pulp mill in Australia's Tasmania state, surged 8 cents, or 6.9 percent, to A$1.31, the benchmark's biggest gainer. The company said its recent institutional offer allowed it to repay its extended working capital facility and a part of its debt facilities.
3D Oil Ltd. (TDO AU), an Australian oil and gas explorer, soared 1 cent, or 13 percent, to 13 cents. Director Peter Wilcox acquired 300,000 shares in the company worth A$37,589, according to a statement filed to the Australian stock exchange.
To contact the reporter on this story: Shani Raja in Sydney at sraja4@bloomberg.net
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Asian Stocks Decline, Set for Worst Week Since August 2007
By Patrick Rial
Oct. 3 (Bloomberg) -- Asian stocks fell, driving the region's benchmark index to its biggest weekly drop in 13 months, as borrowing costs rose and concern grew that a U.S. $700 billion bank rescue plan won't prevent a recession.
Toyota Motor Corp., the world's second-largest automaker, plunged 6 percent after U.S. factory orders declined and jobless claims surged. Rio Tinto Group fell 4.7 percent as commodity prices headed for their biggest weekly decline in 50 years. Orix Corp., Japan's biggest leasing company, lost 12 percent on concern it will face difficulty financing its debt as three-month lending rates climbed to their highest since at least January.
``We know that there's a financial crisis, and now the question is are we going to have an economic correction or crisis,'' said Masayuki Kubota, a senior fund manager at Daiwa SB Investments Ltd. in Tokyo, who helps oversee $1.7 billion. ``If it does turn into a crisis, there is a lot of downside for equity markets.''
The MSCI Asia Pacific Index declined 1.8 percent to 105.33 as of 2:41 p.m. in Tokyo, set to close at its lowest since August 2005. The measure is poised to drop 7.4 percent this week, led by commodity producers, after Congress voted down the first passage of the bailout plan.
That would be the biggest weekly decline since the five days to Aug. 17, 2007, when credit markets first seized up as rising U.S. mortgage defaults prompted banks to rein in lending. Shares included in MSCI's Asian gauge trade at 12.2 times estimated earnings, compared with 13.2 times for Standard & Poor's 500 Index and 9.6 times for Europe's Dow Jones Stoxx 600 Index.
Nikkei, Hang Seng
All benchmark indexes open for trading in the region dropped today apart from Taiwan. Markets in China, South Korea, Indonesia and Pakistan are shut for holidays.
Japan's Nikkei 225 Stock Average fell 1.4 percent to 11,000.25. The measure has lost 7.5 percent this week, the most since August 2007, while the Hang Seng Index dropped 4.6 percent, capping a five-week, 16 percent decline.
Futures on the S&P 500 gained 0.5 percent. The S&P 500 lost 4 percent yesterday. Caterpillar Inc. slumped 8.3 percent as lending rates soared and General Electric Co. plunged 9.6 percent after selling shares at a discount.
A surge in market volatility and a contraction in credit led to the failures last month of Lehman Brothers Holdings Inc. and Washington Mutual Inc., the sale of Merrill Lynch & Co. to Bank of America Corp., and the nationalization of American International Group Inc.
Toyota lost 6 percent to 4,050 yen. The carmaker offered no- interest loans on 11 U.S. models after sales in the country plummeted the most since 1987. Reliance Industries Ltd., India's most valuable company, dropped 3.5 percent to 1,838.50 rupees.
U.S. Unemployment
The U.S. may fall into a recession as the financial rout deepens, the International Monetary Fund said, after predicting a moderate contraction in July.
Orders to U.S. factories fell 4 percent in August, the Commerce Department said, more than economists had forecast. The number of people collecting jobless benefits rose to 3.59 million in the week ended Sept. 20, the most since 2003. Economists estimate a U.S. report being released today will show that payrolls dropped the most in five years in September and the unemployment rate remained at 6.1 percent.
``Investors' focus is shifting from a financial crisis to a worsening economy with a slowdown in the U.S. spreading among other nations,'' said Kiyoshi Ishigane, a senior strategist at Mitsubishi UFJ Asset Management Co., which oversees about $61 billion in Tokyo. ``Their views on the fundamentals of the global economy are radically changing.''
Rio Tinto slid 3.1 percent to A$88.45. Newcrest Mining Ltd., Australia's largest gold producer, fell 5.1 percent to A$27.37. Mitsubishi Corp., which generates more than half of its profit from commodities dealing, lost 6.6 percent to 1,910 yen.
Crude Oil
Commodities, as measured by the Reuters/Jefferies CRB Index of 19 raw materials, have fallen 9.9 percent this week, the largest drop since at least 1956 on concern that demand will weaken as global economic growth slows. Crude oil has lost 13 percent to recently trade at $93.35 a barrel, set for its worst weekly performance since December 2004.
Orix, which has debt equal to three times its equity, slumped 12 percent to 10,600 yen. China Construction Bank Corp., the nation's second-biggest lender, lost 3 percent to HK$4.87.
Banks in Singapore are charging each other three-month U.S. dollar loans at 4.27 percent, the highest since Jan. 11. Hong Kong's interbank offered rate for similar-term loans in the city's currency, known as Hibor, climbed to 3.81 percent, the highest since Dec. 10.
Funding
Difficulty borrowing money is crippling the ability of some companies to fund their everyday operations. GE, once the world's largest company by market value, was forced to raise $12 billion through a share sale to keep its business going. The move by GE, which carries debt at four times its equity, highlights the danger leveraged companies face as funding dries up.
Fast Retailing Co., the operator of Japan's Uniqlo casual clothing store chain, rallied 14 percent to 12,450 yen, the biggest percentage move in MSCI's Asian gauge. September sales at stores open at least 12 months jumped 21 percent, the company said yesterday.
To contact the reporter for this story: Patrick Rial in Tokyo at prial@bloomberg.net; Shani Raja in Sydney at sraja4@bloomberg.net.
Read more...
Oct. 3 (Bloomberg) -- Asian stocks fell, driving the region's benchmark index to its biggest weekly drop in 13 months, as borrowing costs rose and concern grew that a U.S. $700 billion bank rescue plan won't prevent a recession.
Toyota Motor Corp., the world's second-largest automaker, plunged 6 percent after U.S. factory orders declined and jobless claims surged. Rio Tinto Group fell 4.7 percent as commodity prices headed for their biggest weekly decline in 50 years. Orix Corp., Japan's biggest leasing company, lost 12 percent on concern it will face difficulty financing its debt as three-month lending rates climbed to their highest since at least January.
``We know that there's a financial crisis, and now the question is are we going to have an economic correction or crisis,'' said Masayuki Kubota, a senior fund manager at Daiwa SB Investments Ltd. in Tokyo, who helps oversee $1.7 billion. ``If it does turn into a crisis, there is a lot of downside for equity markets.''
The MSCI Asia Pacific Index declined 1.8 percent to 105.33 as of 2:41 p.m. in Tokyo, set to close at its lowest since August 2005. The measure is poised to drop 7.4 percent this week, led by commodity producers, after Congress voted down the first passage of the bailout plan.
That would be the biggest weekly decline since the five days to Aug. 17, 2007, when credit markets first seized up as rising U.S. mortgage defaults prompted banks to rein in lending. Shares included in MSCI's Asian gauge trade at 12.2 times estimated earnings, compared with 13.2 times for Standard & Poor's 500 Index and 9.6 times for Europe's Dow Jones Stoxx 600 Index.
Nikkei, Hang Seng
All benchmark indexes open for trading in the region dropped today apart from Taiwan. Markets in China, South Korea, Indonesia and Pakistan are shut for holidays.
Japan's Nikkei 225 Stock Average fell 1.4 percent to 11,000.25. The measure has lost 7.5 percent this week, the most since August 2007, while the Hang Seng Index dropped 4.6 percent, capping a five-week, 16 percent decline.
Futures on the S&P 500 gained 0.5 percent. The S&P 500 lost 4 percent yesterday. Caterpillar Inc. slumped 8.3 percent as lending rates soared and General Electric Co. plunged 9.6 percent after selling shares at a discount.
A surge in market volatility and a contraction in credit led to the failures last month of Lehman Brothers Holdings Inc. and Washington Mutual Inc., the sale of Merrill Lynch & Co. to Bank of America Corp., and the nationalization of American International Group Inc.
Toyota lost 6 percent to 4,050 yen. The carmaker offered no- interest loans on 11 U.S. models after sales in the country plummeted the most since 1987. Reliance Industries Ltd., India's most valuable company, dropped 3.5 percent to 1,838.50 rupees.
U.S. Unemployment
The U.S. may fall into a recession as the financial rout deepens, the International Monetary Fund said, after predicting a moderate contraction in July.
Orders to U.S. factories fell 4 percent in August, the Commerce Department said, more than economists had forecast. The number of people collecting jobless benefits rose to 3.59 million in the week ended Sept. 20, the most since 2003. Economists estimate a U.S. report being released today will show that payrolls dropped the most in five years in September and the unemployment rate remained at 6.1 percent.
``Investors' focus is shifting from a financial crisis to a worsening economy with a slowdown in the U.S. spreading among other nations,'' said Kiyoshi Ishigane, a senior strategist at Mitsubishi UFJ Asset Management Co., which oversees about $61 billion in Tokyo. ``Their views on the fundamentals of the global economy are radically changing.''
Rio Tinto slid 3.1 percent to A$88.45. Newcrest Mining Ltd., Australia's largest gold producer, fell 5.1 percent to A$27.37. Mitsubishi Corp., which generates more than half of its profit from commodities dealing, lost 6.6 percent to 1,910 yen.
Crude Oil
Commodities, as measured by the Reuters/Jefferies CRB Index of 19 raw materials, have fallen 9.9 percent this week, the largest drop since at least 1956 on concern that demand will weaken as global economic growth slows. Crude oil has lost 13 percent to recently trade at $93.35 a barrel, set for its worst weekly performance since December 2004.
Orix, which has debt equal to three times its equity, slumped 12 percent to 10,600 yen. China Construction Bank Corp., the nation's second-biggest lender, lost 3 percent to HK$4.87.
Banks in Singapore are charging each other three-month U.S. dollar loans at 4.27 percent, the highest since Jan. 11. Hong Kong's interbank offered rate for similar-term loans in the city's currency, known as Hibor, climbed to 3.81 percent, the highest since Dec. 10.
Funding
Difficulty borrowing money is crippling the ability of some companies to fund their everyday operations. GE, once the world's largest company by market value, was forced to raise $12 billion through a share sale to keep its business going. The move by GE, which carries debt at four times its equity, highlights the danger leveraged companies face as funding dries up.
Fast Retailing Co., the operator of Japan's Uniqlo casual clothing store chain, rallied 14 percent to 12,450 yen, the biggest percentage move in MSCI's Asian gauge. September sales at stores open at least 12 months jumped 21 percent, the company said yesterday.
To contact the reporter for this story: Patrick Rial in Tokyo at prial@bloomberg.net; Shani Raja in Sydney at sraja4@bloomberg.net.
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Japan Stocks Drop on U.S. Growth Concerns; Fast Retailing Jumps
By Masaki Kondo
Oct. 3 (Bloomberg) -- Japan's stocks fell, capping the worst week in 13 months, on concern demand will decrease in the U.S. after economic reports showed the nation's largest overseas market is slowing.
Honda Motor Co., which gets more than half its profit in North America, fell 5.5 percent as a credit crisis weighs on the global economy. Orix Corp., a leasing-services provider, plunged 11 percent on speculation financial businesses will run out of cash amid tightening credit. Fast Retailing Co., Japan's biggest clothing retailer, surged 14 percent, the most in five years, after sales at its stores jumped by a fifth.
``Investors' focus is shifting from a financial crisis to a worsening economy with a slowdown in the U.S. spreading among other nations,'' said Kiyoshi Ishigane, a senior strategist at Mitsubishi UFJ Asset Management Co., which oversees about $61 billion in Tokyo. ``Their views on the fundamentals of the global economy are radically changing.
The Nikkei 225 Stock Average declined 216.62, or 1.9 percent, to close at 10,938.14 in Tokyo. The broader Topix index fell 29, or 2.7 percent, to 1,047.97, the lowest since February 2004. The Topix had a weekly drop of 8.7 percent, the worst since August 2007. Four stocks slumped for each that rose on the Topix.
About $20 trillion has been erased from global stock markets since a high on Oct. 31 as the worst U.S. housing recession since the Great Depression led to a slowdown in the world's economy. The International Monetary Fund yesterday said the U.S. is poised to encounter a ``sharp downturn'' as financial turmoil ``has mutated into a full-blown crisis.''
Nikkei futures expiring in December retreated 1.4 percent to 10,990 in Osaka and slid 1.9 percent to 10,990 in Singapore.
To contact the reporter for this story: Masaki Kondo in Tokyo at mkondo3@bloomberg.net.
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Oct. 3 (Bloomberg) -- Japan's stocks fell, capping the worst week in 13 months, on concern demand will decrease in the U.S. after economic reports showed the nation's largest overseas market is slowing.
Honda Motor Co., which gets more than half its profit in North America, fell 5.5 percent as a credit crisis weighs on the global economy. Orix Corp., a leasing-services provider, plunged 11 percent on speculation financial businesses will run out of cash amid tightening credit. Fast Retailing Co., Japan's biggest clothing retailer, surged 14 percent, the most in five years, after sales at its stores jumped by a fifth.
``Investors' focus is shifting from a financial crisis to a worsening economy with a slowdown in the U.S. spreading among other nations,'' said Kiyoshi Ishigane, a senior strategist at Mitsubishi UFJ Asset Management Co., which oversees about $61 billion in Tokyo. ``Their views on the fundamentals of the global economy are radically changing.
The Nikkei 225 Stock Average declined 216.62, or 1.9 percent, to close at 10,938.14 in Tokyo. The broader Topix index fell 29, or 2.7 percent, to 1,047.97, the lowest since February 2004. The Topix had a weekly drop of 8.7 percent, the worst since August 2007. Four stocks slumped for each that rose on the Topix.
About $20 trillion has been erased from global stock markets since a high on Oct. 31 as the worst U.S. housing recession since the Great Depression led to a slowdown in the world's economy. The International Monetary Fund yesterday said the U.S. is poised to encounter a ``sharp downturn'' as financial turmoil ``has mutated into a full-blown crisis.''
Nikkei futures expiring in December retreated 1.4 percent to 10,990 in Osaka and slid 1.9 percent to 10,990 in Singapore.
To contact the reporter for this story: Masaki Kondo in Tokyo at mkondo3@bloomberg.net.
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Canal Plus, Eurologic, Ingenico, Vinci: French Stocks Preview
By Helene Fouquet
Oct. 3 (Bloomberg) -- The following is a list of companies whose stocks may have unusual changes in Paris. Symbols are in parentheses after company names and prices are from the last close.
France's CAC 40 Index slid 91.26, or 2.3 percent, to 3,963.28 in Paris, ending a two-day rally. The SBF 120 Index decreased 2.2 percent.
Canal Plus (AN FP): The pay-television unit of Vivendi SA and France's two biggest broadcasters Societe Television Francaise 1 (TFI FP) and M6-Metropole Television (MMT FP) are protesting a government decision to give state television 450 million euros in financing for 2009. Canal Plus shares fell 3 cents to 6.20 euros, TF1 added 29 cents, or 2.3 percent, to 12.67 euros and M6 dropped 4 cents to 15.46 euros.
Groupe Eurologic (ALEUR FP): The industrial engineering company said full fiscal year net income jumped to 4.1 million euros from 1.9 million euros a year earlier. The shares lost 9 cents, or 1.6 percent, to 5.40 euros.
Euro Ressources SA (EUR FP): Iamgold Corp.'s 1.20 euros a share bid for the gold and diamond exploration company was approved by the French stock market regulator and will begin Oct. 6. The shares dropped 2 cents, or 1.7 percent, to 1.15 euros.
Ingenico SA (ING FP): The world's largest maker of payment terminals hired Jacques Behr to be managing director of its French unit. The shares declined 1.05 euros, or 6.1 percent, to 16.18 euros.
Vinci SA (DG FP): The world's biggest construction company and Eiffage SA (FGR FP) completed arrangement to finance the Prado Sud tunnel in Marseilles for 189 million euros. Vinci shares lost 90 cents, or 2.8 percent, to 31.60 euros, and Eiffage declined 71 cents, or 1.9 percent, to 37.19 euros.
To contact the reporter on this story: Helene Fouquet in Paris at hfouquet1@bloomberg.net.
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Oct. 3 (Bloomberg) -- The following is a list of companies whose stocks may have unusual changes in Paris. Symbols are in parentheses after company names and prices are from the last close.
France's CAC 40 Index slid 91.26, or 2.3 percent, to 3,963.28 in Paris, ending a two-day rally. The SBF 120 Index decreased 2.2 percent.
Canal Plus (AN FP): The pay-television unit of Vivendi SA and France's two biggest broadcasters Societe Television Francaise 1 (TFI FP) and M6-Metropole Television (MMT FP) are protesting a government decision to give state television 450 million euros in financing for 2009. Canal Plus shares fell 3 cents to 6.20 euros, TF1 added 29 cents, or 2.3 percent, to 12.67 euros and M6 dropped 4 cents to 15.46 euros.
Groupe Eurologic (ALEUR FP): The industrial engineering company said full fiscal year net income jumped to 4.1 million euros from 1.9 million euros a year earlier. The shares lost 9 cents, or 1.6 percent, to 5.40 euros.
Euro Ressources SA (EUR FP): Iamgold Corp.'s 1.20 euros a share bid for the gold and diamond exploration company was approved by the French stock market regulator and will begin Oct. 6. The shares dropped 2 cents, or 1.7 percent, to 1.15 euros.
Ingenico SA (ING FP): The world's largest maker of payment terminals hired Jacques Behr to be managing director of its French unit. The shares declined 1.05 euros, or 6.1 percent, to 16.18 euros.
Vinci SA (DG FP): The world's biggest construction company and Eiffage SA (FGR FP) completed arrangement to finance the Prado Sud tunnel in Marseilles for 189 million euros. Vinci shares lost 90 cents, or 2.8 percent, to 31.60 euros, and Eiffage declined 71 cents, or 1.9 percent, to 37.19 euros.
To contact the reporter on this story: Helene Fouquet in Paris at hfouquet1@bloomberg.net.
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British Airways, Woolworths, Regal: U.K., Irish Equity Preview
By Lenka Ponikelska and Alexis Xydias
Oct. 3 (Bloomberg) -- The following is a list of companies whose shares may have unusual price changes in U.K. and Irish markets today. Stock symbols are in parentheses and prices are from the last market close.
The benchmark FTSE 100 Index declined 89.25, or 1.8 percent, to 4,870.34. The FTSE All-Share Index fell 1.5 percent, and Ireland's ISEQ Index climbed 5 percent.
U.K. companies:
Blacks Leisure Group Plc (BSLA LN): The U.K.'s largest retailer of outdoor gear said its first-half loss will widen after ``difficult'' trading in August. The shares declined 1.75 pence, or 1.9 percent, to 89.5.
British Airways Plc (BAY LN): Europe's third-largest carrier is publishing traffic data. The stock added 4.6 pence, or 2.7 percent, to 178.1.
DTZ Holdings Plc (DTZ LN): The U.K. real-estate broker asked JPMorgan Cazenove Ltd. to work on an equity fundraising that may involve either a placing or a rights offering, the Daily Telegraph reported, saying the idea is still in the very early stages of planning. The shares fell 2.25 pence, or 1.7 percent, to 127 pence.
Royal Dutch Shell Plc (RDSA LN): Europe's largest oil company has proposed a $1.2 billion takeover of oil-and-gas explorer Regal Petroleum Plc (RPT LN), the Daily Telegraph reported. Shell, which faced rejection when it tried to reach a deal with Regal last year, has written to the company's chairman, Keith Henry, in the last few days with a proposal at 300 pence a share, the newspaper said, without saying where it got the information. Shell shares fell 47 pence, or 2.9 percent, to 1,583 pence. Regal shares fell 4 pence, or 4.6 percent, to 83 pence.
Taylor Wimpey Plc (TW/ LN): The U.K.'s largest homebuilder said talks aimed at easing loan conditions to avoid a breach of its banking covenants have been extended and will ``likely'' conclude early next year as the company tackles the biggest housing slump in 25 years. The shares fell 1.25 pence, or 3.5 percent, to 34.5.
Unilever Plc (ULVR LN): Investors are set to urge a change in the way the world's second-largest consumer-products maker operates under incoming Chief Executive Officer Paul Polman, the Financial Times reported, citing the investors. The shares fell 34 pence, or 2.2 percent, to 1,529 pence.
Woolworths Group Plc (WLW LN): Woolworths' unit Bertrams and its parent company EUK are in discussions with some distributors and publishers over reduced credit terms, the Bookseller said on its Web site, citing unidentified publishers. Woolworths shares fell 0.05 pence, or 1.2 percent, to 4.2 pence.
Irish companies:
United Drug Plc (UDG ID): Ireland's biggest medicines supplier met its targets of a double-digit increase in operating profit and earnings for the year ending Sept. 30. The shares added 16 cents, or 4.3 percent, to 3.89 euros.
To contact the reporter on this story: Lenka Ponikelska in London lponikelska1@bloomberg.net
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Oct. 3 (Bloomberg) -- The following is a list of companies whose shares may have unusual price changes in U.K. and Irish markets today. Stock symbols are in parentheses and prices are from the last market close.
The benchmark FTSE 100 Index declined 89.25, or 1.8 percent, to 4,870.34. The FTSE All-Share Index fell 1.5 percent, and Ireland's ISEQ Index climbed 5 percent.
U.K. companies:
Blacks Leisure Group Plc (BSLA LN): The U.K.'s largest retailer of outdoor gear said its first-half loss will widen after ``difficult'' trading in August. The shares declined 1.75 pence, or 1.9 percent, to 89.5.
British Airways Plc (BAY LN): Europe's third-largest carrier is publishing traffic data. The stock added 4.6 pence, or 2.7 percent, to 178.1.
DTZ Holdings Plc (DTZ LN): The U.K. real-estate broker asked JPMorgan Cazenove Ltd. to work on an equity fundraising that may involve either a placing or a rights offering, the Daily Telegraph reported, saying the idea is still in the very early stages of planning. The shares fell 2.25 pence, or 1.7 percent, to 127 pence.
Royal Dutch Shell Plc (RDSA LN): Europe's largest oil company has proposed a $1.2 billion takeover of oil-and-gas explorer Regal Petroleum Plc (RPT LN), the Daily Telegraph reported. Shell, which faced rejection when it tried to reach a deal with Regal last year, has written to the company's chairman, Keith Henry, in the last few days with a proposal at 300 pence a share, the newspaper said, without saying where it got the information. Shell shares fell 47 pence, or 2.9 percent, to 1,583 pence. Regal shares fell 4 pence, or 4.6 percent, to 83 pence.
Taylor Wimpey Plc (TW/ LN): The U.K.'s largest homebuilder said talks aimed at easing loan conditions to avoid a breach of its banking covenants have been extended and will ``likely'' conclude early next year as the company tackles the biggest housing slump in 25 years. The shares fell 1.25 pence, or 3.5 percent, to 34.5.
Unilever Plc (ULVR LN): Investors are set to urge a change in the way the world's second-largest consumer-products maker operates under incoming Chief Executive Officer Paul Polman, the Financial Times reported, citing the investors. The shares fell 34 pence, or 2.2 percent, to 1,529 pence.
Woolworths Group Plc (WLW LN): Woolworths' unit Bertrams and its parent company EUK are in discussions with some distributors and publishers over reduced credit terms, the Bookseller said on its Web site, citing unidentified publishers. Woolworths shares fell 0.05 pence, or 1.2 percent, to 4.2 pence.
Irish companies:
United Drug Plc (UDG ID): Ireland's biggest medicines supplier met its targets of a double-digit increase in operating profit and earnings for the year ending Sept. 30. The shares added 16 cents, or 4.3 percent, to 3.89 euros.
To contact the reporter on this story: Lenka Ponikelska in London lponikelska1@bloomberg.net
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America Movil, M. Dias Branco, MMX, Oma: Latin Equity Preview
By William Freebairn and Paulo Winterstein
Oct. 3 (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 8.5 percent yesterday to 2,912.3.
Brazil
M. Dias Branco SA (MDIA3 BS): Brazil's biggest maker of pasta and cookies was rated ``outperform'' in new coverage at Fator Corretora. The market leader will likely expand nationally and increase the use of installed capacity, allowing for greater sales without additional investments, analyst Renato Prado wrote in a note yesterday. M. Dias rose 1 percent to 20 reais.
MMX Mineracao e Metalicos SA (MMXM3 BS): The Brazilian mining company controlled by billionaire Eike Batista is a ``major'' takeover target after shares dropped 46 percent in the past week, Credit Suisse analysts Roger Downey said. ``Even under extreme assumptions, MMX is trading at dirt cheap valuation levels,'' he said yesterday in a note to clients. MMX dropped 12 percent to 7.25 reais.
Mexico
America Movil SAB (AMXL MM): Latin America's largest mobile- phone company was upgraded to ``buy'' from ``hold'' by equity analysts at Standard & Poor's. America Movil will gain from ``strong'' growth in Brazil, Colombia and Peru even as Mexican competition increases, the agency said in a research note yesterday. America Movil fell 6.3 percent to 23.93 pesos.
Grupo Aeroportuario del Centro Norte SAB (OMAB MM): The smallest of the three Mexican airport operators not owned by the government said passenger traffic this year may decline as much as 1 percent and its profit margin will narrow by 2 percentage points. Passenger traffic will decline in the period from September to December compared with a year earlier, Grupo Aeroportuario del Centro Norte said in a statement to the Mexican stock exchange. Oma, as the company is known, fell 5.4 percent to 15.15 pesos.
Peru
Southern Copper Corp. (PCU/C PE): Peruvian copper production fell 0.9 percent in August from a year earlier on declines at mines run by Southern Copper, a unit of Mexico's largest mining company. Output fell to 108,200 metric tons, the Energy and Mines Ministry said in a statement e-mailed yesterday. Southern Copper fell 14 percent to $15.80.
To contact the reporters on this story: William Freebairn in Mexico City at wfreebairn@bloomberg.net; Paulo Winterstein in Sao Paulo at pwinterstein@bloomberg.net.
Read more...
Oct. 3 (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 8.5 percent yesterday to 2,912.3.
Brazil
M. Dias Branco SA (MDIA3 BS): Brazil's biggest maker of pasta and cookies was rated ``outperform'' in new coverage at Fator Corretora. The market leader will likely expand nationally and increase the use of installed capacity, allowing for greater sales without additional investments, analyst Renato Prado wrote in a note yesterday. M. Dias rose 1 percent to 20 reais.
MMX Mineracao e Metalicos SA (MMXM3 BS): The Brazilian mining company controlled by billionaire Eike Batista is a ``major'' takeover target after shares dropped 46 percent in the past week, Credit Suisse analysts Roger Downey said. ``Even under extreme assumptions, MMX is trading at dirt cheap valuation levels,'' he said yesterday in a note to clients. MMX dropped 12 percent to 7.25 reais.
Mexico
America Movil SAB (AMXL MM): Latin America's largest mobile- phone company was upgraded to ``buy'' from ``hold'' by equity analysts at Standard & Poor's. America Movil will gain from ``strong'' growth in Brazil, Colombia and Peru even as Mexican competition increases, the agency said in a research note yesterday. America Movil fell 6.3 percent to 23.93 pesos.
Grupo Aeroportuario del Centro Norte SAB (OMAB MM): The smallest of the three Mexican airport operators not owned by the government said passenger traffic this year may decline as much as 1 percent and its profit margin will narrow by 2 percentage points. Passenger traffic will decline in the period from September to December compared with a year earlier, Grupo Aeroportuario del Centro Norte said in a statement to the Mexican stock exchange. Oma, as the company is known, fell 5.4 percent to 15.15 pesos.
Peru
Southern Copper Corp. (PCU/C PE): Peruvian copper production fell 0.9 percent in August from a year earlier on declines at mines run by Southern Copper, a unit of Mexico's largest mining company. Output fell to 108,200 metric tons, the Energy and Mines Ministry said in a statement e-mailed yesterday. Southern Copper fell 14 percent to $15.80.
To contact the reporters 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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Goldman Executives Restrained From Stock Sales in Buffett Deal
By Christine Harper
Oct. 3 (Bloomberg) -- Goldman Sachs Group Inc.'s top four executives agreed to hold on to 90 percent of the stock they own in the company as part of Goldman's agreement to raise money from Warren Buffett's Berkshire Hathaway Inc.
Chief Executive Officer Lloyd Blankfein, Chief Financial Officer David Viniar and Co-Presidents Gary Cohn and Jon Winkelried are named in the ``material definitive agreement'' disclosed yesterday by New York-based Goldman in a regulatory filing.
The accord prevents the executives, their families and their estates from selling more than 10 percent of the common stock they own until Oct. 1, 2011, or until Berkshire redeems its $5 billion in preferred stock, whichever comes soonest. Blankfein last month turned to Buffett, the second-richest American and a cult figure in the investing world, to shore up the investment bank's capital base and restore market confidence after Goldman's stock tumbled and its borrowing costs spiked.
``The bet he's making is not just on the horse but on the jockeys,'' said Douglas Ciocca, a managing director at Renaissance Financial Corp. in Leawood, Kansas, which manages $1.8 billion including Goldman shares. ``That's the kind of commitment that is really being sought after in a lot of efforts to protect investors.''
Blankfein, 54, owned 3.4 million shares of Goldman common stock as of Feb. 11, according to Goldman's 2008 proxy statement. Cohn, 48, owned 2.04 million shares, Winkelried, 49, owned 2.89 million shares and Viniar, 53, owned 1.91 million, according to the same filing.
`Keep Your Money Here'
``It certainly is a reinforcement of Warren Buffett saying, `You have to keep your money in here if you have my money,''' said Eleanor Bloxham, president of the Corporate Governance Alliance in Columbus, Ohio, which provides board education and advisory services. ``It is something investors would like to see.''
Lucas van Praag, a spokesman for Goldman in New York, didn't reply to calls and e-mails seeking comment.
``Warren Buffett is known as one who relies on the people running organizations almost as much as the core business itself,'' said Michael Yoshikami, president and chief investment strategist at YCMNet Advisors in Walnut Creek, California, which manages $1 billion including Berkshire Hathaway stock. ``He not only wants managers but he wants managers who can participate in however the business grows.''
The agreement pertains to stock owned by the executives as of Sept. 28. Goldman's stock closed at $131.54 in New York Stock Exchange composite trading yesterday and has dropped 39 percent this year.
To contact the reporter on this story: Christine Harper in New York at charper@bloomberg.net.
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Oct. 3 (Bloomberg) -- Goldman Sachs Group Inc.'s top four executives agreed to hold on to 90 percent of the stock they own in the company as part of Goldman's agreement to raise money from Warren Buffett's Berkshire Hathaway Inc.
Chief Executive Officer Lloyd Blankfein, Chief Financial Officer David Viniar and Co-Presidents Gary Cohn and Jon Winkelried are named in the ``material definitive agreement'' disclosed yesterday by New York-based Goldman in a regulatory filing.
The accord prevents the executives, their families and their estates from selling more than 10 percent of the common stock they own until Oct. 1, 2011, or until Berkshire redeems its $5 billion in preferred stock, whichever comes soonest. Blankfein last month turned to Buffett, the second-richest American and a cult figure in the investing world, to shore up the investment bank's capital base and restore market confidence after Goldman's stock tumbled and its borrowing costs spiked.
``The bet he's making is not just on the horse but on the jockeys,'' said Douglas Ciocca, a managing director at Renaissance Financial Corp. in Leawood, Kansas, which manages $1.8 billion including Goldman shares. ``That's the kind of commitment that is really being sought after in a lot of efforts to protect investors.''
Blankfein, 54, owned 3.4 million shares of Goldman common stock as of Feb. 11, according to Goldman's 2008 proxy statement. Cohn, 48, owned 2.04 million shares, Winkelried, 49, owned 2.89 million shares and Viniar, 53, owned 1.91 million, according to the same filing.
`Keep Your Money Here'
``It certainly is a reinforcement of Warren Buffett saying, `You have to keep your money in here if you have my money,''' said Eleanor Bloxham, president of the Corporate Governance Alliance in Columbus, Ohio, which provides board education and advisory services. ``It is something investors would like to see.''
Lucas van Praag, a spokesman for Goldman in New York, didn't reply to calls and e-mails seeking comment.
``Warren Buffett is known as one who relies on the people running organizations almost as much as the core business itself,'' said Michael Yoshikami, president and chief investment strategist at YCMNet Advisors in Walnut Creek, California, which manages $1 billion including Berkshire Hathaway stock. ``He not only wants managers but he wants managers who can participate in however the business grows.''
The agreement pertains to stock owned by the executives as of Sept. 28. Goldman's stock closed at $131.54 in New York Stock Exchange composite trading yesterday and has dropped 39 percent this year.
To contact the reporter on this story: Christine Harper in New York at charper@bloomberg.net.
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French Economy Entered Recession in Third Quarter, Insee Says
By Sandrine Rastello
Oct. 3 (Bloomberg) -- France's economy, the second largest of the 15 countries sharing the euro, slipped into recession for the first time in more than 15 years in the third quarter, Insee, the national statistics office, forecast.
Gross domestic product probably shrank 0.1 percent in the third quarter after a contraction of 0.3 percent in the three months through June, Insee economists said in Paris. The economy will also shrink 0.1 percent in the final three months to cut growth to 0.9 percent for the full year, the slowest pace since 1993, Insee said.
The global credit crisis is threatening to further aggravate a global economic slowdown as credit for new investment dries up. Insee predicts consumer spending, which has fueled growth over the past years, will stagnate in the second half as both employment and the real estate market deteriorate.
``The French economy continues to be hurt,'' Insee's chief forecaster Eric Dubois said at a briefing in Paris yesterday. The current credit crisis ``is an important risk,'' he said, as well as oil prices, ``which have become more volatile.''
Growth in France will lag behind the euro region for a third year, according to the Insee forecasts. The government, which sees expansion this year and next of around 1 percent, last week shelved plans to narrow its budget deficit as the slowdown dents tax receipts and boosts welfare costs.
EU Recession?
The economy of the euro zone also contracted in the second quarter and the global credit crisis is pushing the region closer to recession as well. Confidence in the economic outlook for the euro area is the lowest since the slump following the Sept. 11 terrorist attacks in 2001, according to the European Commission.
President Nicolas Sarkozy's 8 billion euros ($11 billion) of tax cuts this year were not enough to buoy French growth as surging commodities prices fanned inflation and global demand cooled.
Yesterday Sarkozy said the government will buy more than 30,000 unfinished homes at a discount to underpin the slumping real estate market. French housing starts fell 13 percent to 394,726 in the June-August period from a year earlier and the weaker demand has begun to drive down the price of existing homes.
Insee sees consumer spending stagnating in the second half and unemployment rising to 7.8 percent by the end of the year, from 7.6 percent in the second quarter.
Corporate investment will fall 0.2 percent this quarter and 0.1 percent in the last three months of the year, it predicted. Exports will rise 0.1 percent before falling 0.2 percent, while imports will drop 0.1 percent and then increase at the same pace in the fourth quarter, it forecast.
To contact the reporters on this story: Sandrine Rastello in Paris at srastello@bloomberg.net;
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Oct. 3 (Bloomberg) -- France's economy, the second largest of the 15 countries sharing the euro, slipped into recession for the first time in more than 15 years in the third quarter, Insee, the national statistics office, forecast.
Gross domestic product probably shrank 0.1 percent in the third quarter after a contraction of 0.3 percent in the three months through June, Insee economists said in Paris. The economy will also shrink 0.1 percent in the final three months to cut growth to 0.9 percent for the full year, the slowest pace since 1993, Insee said.
The global credit crisis is threatening to further aggravate a global economic slowdown as credit for new investment dries up. Insee predicts consumer spending, which has fueled growth over the past years, will stagnate in the second half as both employment and the real estate market deteriorate.
``The French economy continues to be hurt,'' Insee's chief forecaster Eric Dubois said at a briefing in Paris yesterday. The current credit crisis ``is an important risk,'' he said, as well as oil prices, ``which have become more volatile.''
Growth in France will lag behind the euro region for a third year, according to the Insee forecasts. The government, which sees expansion this year and next of around 1 percent, last week shelved plans to narrow its budget deficit as the slowdown dents tax receipts and boosts welfare costs.
EU Recession?
The economy of the euro zone also contracted in the second quarter and the global credit crisis is pushing the region closer to recession as well. Confidence in the economic outlook for the euro area is the lowest since the slump following the Sept. 11 terrorist attacks in 2001, according to the European Commission.
President Nicolas Sarkozy's 8 billion euros ($11 billion) of tax cuts this year were not enough to buoy French growth as surging commodities prices fanned inflation and global demand cooled.
Yesterday Sarkozy said the government will buy more than 30,000 unfinished homes at a discount to underpin the slumping real estate market. French housing starts fell 13 percent to 394,726 in the June-August period from a year earlier and the weaker demand has begun to drive down the price of existing homes.
Insee sees consumer spending stagnating in the second half and unemployment rising to 7.8 percent by the end of the year, from 7.6 percent in the second quarter.
Corporate investment will fall 0.2 percent this quarter and 0.1 percent in the last three months of the year, it predicted. Exports will rise 0.1 percent before falling 0.2 percent, while imports will drop 0.1 percent and then increase at the same pace in the fourth quarter, it forecast.
To contact the reporters on this story: Sandrine Rastello in Paris at srastello@bloomberg.net;
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Trichet Poised for `Volte Face' Rate Cut as Summit Approaches
By Simon Kennedy
Oct. 3 (Bloomberg) -- Jean-Claude Trichet is poised to execute his first interest-rate cut since becoming European Central Bank president almost five years ago.
Investors yesterday raised bets on a quarter-point rate reduction as early as next month after Trichet said he and the bank's 20 other policy makers debated such a step for the first time since the credit squeeze began.
The shift marks an end to almost three years in which the Frankfurt-based bank cited inflation as its preeminent concern and 14 months of seeking to protect the economy from the financial market turmoil without using monetary policy. A looming recession and five bank bailouts this week have changed the tone in Europe. Trichet and political leaders from the continent's four largest economies are set to hold an emergency summit tomorrow.
``This volte-face from the ECB shows that it has lost complete confidence about the economic outlook and recognizes that an interest-rate cut may now finally be needed,'' said Jacques Cailloux, chief euro-area economist at Royal Bank of Scotland Group Plc in London.
Trichet's comments came as he and the leaders from Germany, France, Britain and Italy prepare to meet in Paris tomorrow to discuss the crisis. Governments this week bailed out banks including Fortis and Dexia SA. Officials squabbled yesterday over how to respond to the credit crunch with Germany opposing a unified approach and the Netherlands demanding states set aside funds to help troubled banks.
``All authorities have to be up to their responsibilities, particularly in this period,'' Trichet said yesterday.
Changed Analysis
The euro fell to a 13-month low against the dollar and European government bonds surged after Trichet raised the prospect of lowering the key rate from the 4.25 percent it was increased to in July. ``Increasing downside risks'' dog the economic outlook with the result that ``upside risks to price stability have diminished somewhat,'' he said in Frankfurt.
That was a reversal from his analysis of last month that growth was in a temporary ``trough'' and that ``upside risks to price stability prevail.'' Royal Bank of Scotland, Citigroup Inc. and JPMorgan Chase & Co. responded by predicting lower rates when the bank's Governing Council next meets Nov. 6, earlier than they previously anticipated.
Citigroup economist Juergen Michels said the bank may even cut by a half point should markets remain strained and act sooner in concert with foreign counterparts such as the Federal Reserve. JPMorgan's Chief European Economist David Mackie forecast the bank will slash the benchmark to 2.75 percent by the end of 2009.
``The bank threw the door wide open for a rate cut,'' said Holger Schmieding, chief European economist at Bank of America Corp.
Separation Principle
Until now, the ECB has fought the credit crisis by pushing record amounts of dollars and euros into markets in a bid to jump-start lending. Banks are refusing to lend to each other, propelling money-market borrowing rates to record highs. At the same time, the ECB focused monetary policy on combating inflation that's still almost double its 2 percent limit. It raised the key rate to a seven-year high in July.
What changed is that the market turbulence is now roiling the 15-nation economy, pushing it toward the first recession since the single currency was introduced in 1999 and diffusing the inflation threat.
After the economy contracted in the second quarter, unemployment increased to the highest in more than a year in August and the manufacturing, services and retail sectors shrank for a fourth month in September. Oil prices have retreated 35 percent from a July record of $147.27.
``The many concerns about the economy have evidentially caused the bank to reappraise the situation,'' said Joerg Kraemer, chief economist at Commerzbank AG in Frankfurt.
BOE to Cut?
The ECB may not be alone in easing monetary policy in coming weeks. Investors bet the Bank of England will reduce the benchmark bank rate from 5 percent next week and that the Fed will cut by half a percentage point to 1.5 percent by the end of the month.
Still, with inflation at 3.6 percent and Germany's IG Metall labor union demanding the biggest pay raise in 16 years, Societe Generale SA economist James Nixon said ``next month may still be too early for a cut.'' Kraemer agreed the bank may prefer to wait until December when its staff will have updated economic forecasts.
The risk for the economy is that it is too inflexible to be saved from recession by lower borrowing costs, said Julian Callow, chief European economist at Barclays Capital in London.
``The real economy doesn't react all that much to policy easing even in good times, let along when the banking sector is under the biggest stress in post-war history,'' he said.
To contact the reporter on this story: Simon Kennedy in Paris at skennedy4@bloomberg.net;
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Oct. 3 (Bloomberg) -- Jean-Claude Trichet is poised to execute his first interest-rate cut since becoming European Central Bank president almost five years ago.
Investors yesterday raised bets on a quarter-point rate reduction as early as next month after Trichet said he and the bank's 20 other policy makers debated such a step for the first time since the credit squeeze began.
The shift marks an end to almost three years in which the Frankfurt-based bank cited inflation as its preeminent concern and 14 months of seeking to protect the economy from the financial market turmoil without using monetary policy. A looming recession and five bank bailouts this week have changed the tone in Europe. Trichet and political leaders from the continent's four largest economies are set to hold an emergency summit tomorrow.
``This volte-face from the ECB shows that it has lost complete confidence about the economic outlook and recognizes that an interest-rate cut may now finally be needed,'' said Jacques Cailloux, chief euro-area economist at Royal Bank of Scotland Group Plc in London.
Trichet's comments came as he and the leaders from Germany, France, Britain and Italy prepare to meet in Paris tomorrow to discuss the crisis. Governments this week bailed out banks including Fortis and Dexia SA. Officials squabbled yesterday over how to respond to the credit crunch with Germany opposing a unified approach and the Netherlands demanding states set aside funds to help troubled banks.
``All authorities have to be up to their responsibilities, particularly in this period,'' Trichet said yesterday.
Changed Analysis
The euro fell to a 13-month low against the dollar and European government bonds surged after Trichet raised the prospect of lowering the key rate from the 4.25 percent it was increased to in July. ``Increasing downside risks'' dog the economic outlook with the result that ``upside risks to price stability have diminished somewhat,'' he said in Frankfurt.
That was a reversal from his analysis of last month that growth was in a temporary ``trough'' and that ``upside risks to price stability prevail.'' Royal Bank of Scotland, Citigroup Inc. and JPMorgan Chase & Co. responded by predicting lower rates when the bank's Governing Council next meets Nov. 6, earlier than they previously anticipated.
Citigroup economist Juergen Michels said the bank may even cut by a half point should markets remain strained and act sooner in concert with foreign counterparts such as the Federal Reserve. JPMorgan's Chief European Economist David Mackie forecast the bank will slash the benchmark to 2.75 percent by the end of 2009.
``The bank threw the door wide open for a rate cut,'' said Holger Schmieding, chief European economist at Bank of America Corp.
Separation Principle
Until now, the ECB has fought the credit crisis by pushing record amounts of dollars and euros into markets in a bid to jump-start lending. Banks are refusing to lend to each other, propelling money-market borrowing rates to record highs. At the same time, the ECB focused monetary policy on combating inflation that's still almost double its 2 percent limit. It raised the key rate to a seven-year high in July.
What changed is that the market turbulence is now roiling the 15-nation economy, pushing it toward the first recession since the single currency was introduced in 1999 and diffusing the inflation threat.
After the economy contracted in the second quarter, unemployment increased to the highest in more than a year in August and the manufacturing, services and retail sectors shrank for a fourth month in September. Oil prices have retreated 35 percent from a July record of $147.27.
``The many concerns about the economy have evidentially caused the bank to reappraise the situation,'' said Joerg Kraemer, chief economist at Commerzbank AG in Frankfurt.
BOE to Cut?
The ECB may not be alone in easing monetary policy in coming weeks. Investors bet the Bank of England will reduce the benchmark bank rate from 5 percent next week and that the Fed will cut by half a percentage point to 1.5 percent by the end of the month.
Still, with inflation at 3.6 percent and Germany's IG Metall labor union demanding the biggest pay raise in 16 years, Societe Generale SA economist James Nixon said ``next month may still be too early for a cut.'' Kraemer agreed the bank may prefer to wait until December when its staff will have updated economic forecasts.
The risk for the economy is that it is too inflexible to be saved from recession by lower borrowing costs, said Julian Callow, chief European economist at Barclays Capital in London.
``The real economy doesn't react all that much to policy easing even in good times, let along when the banking sector is under the biggest stress in post-war history,'' he said.
To contact the reporter on this story: Simon Kennedy in Paris at skennedy4@bloomberg.net;
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Australia, New Zealand Dollars Drop as Commodities, Stocks Fall
By Candice Zachariahs
Oct. 3 (Bloomberg) -- The Australian dollar fell to a 14- month low against the greenback and traded at the lowest since 2005 versus the yen as concerns over slowing growth sent prices tumbling for commodities the nation exports. New Zealand's currency also fell.
Australia's currency fell for an eighth day as the UBS Bloomberg Constant Maturity Commodity index of 26 raw materials dropped. The Australian and New Zealand dollars slid against the yen as U.S. stocks dropped for a second day, reducing demand for higher-yielding assets.
``The pressure on the aussie and the kiwi will remain throughout the day,'' said John Body, head of financial markets at ANZ National Bank Ltd. in Auckland, referring to the currencies by their nicknames. The Australian dollar will trade between 77 and 77.80 U.S. cents and the kiwi will buy between 65.25 and 65.80 U.S. cents through the day, he said.
The Australian dollar fell 1.4 percent to 77.34 U.S. cents as of 7:43 a.m. in Sydney from 78.43 cents in late Asian trading yesterday. It touched 77 cents, the weakest since August 2007. The currency dropped to 81.01 yen, the lowest since March 2005, before trading at 81.44 yen from 82.75 yesterday.
New Zealand's dollar weakened 1.5 percent to 65.72 U.S. cents from 66.74 cents late in Asia yesterday. It dropped 1.7 percent to 69.24 yen.
The Australian and New Zealand dollars fell as the price of gold, Australia's third most-valuable raw material export, and crude oil, its fourth most-valuable, slid in New York. Lumber, one of New Zealand's biggest export earners, plunged to a 17- year low on speculation slowing growth will limit demand for building materials.
Raw materials account for 60 percent of Australia's exports, and 70 percent of New Zealand's.
To contact the reporter on this story: Candice Zachariahs in Sydney at czachariahs2@bloomberg.net
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Oct. 3 (Bloomberg) -- The Australian dollar fell to a 14- month low against the greenback and traded at the lowest since 2005 versus the yen as concerns over slowing growth sent prices tumbling for commodities the nation exports. New Zealand's currency also fell.
Australia's currency fell for an eighth day as the UBS Bloomberg Constant Maturity Commodity index of 26 raw materials dropped. The Australian and New Zealand dollars slid against the yen as U.S. stocks dropped for a second day, reducing demand for higher-yielding assets.
``The pressure on the aussie and the kiwi will remain throughout the day,'' said John Body, head of financial markets at ANZ National Bank Ltd. in Auckland, referring to the currencies by their nicknames. The Australian dollar will trade between 77 and 77.80 U.S. cents and the kiwi will buy between 65.25 and 65.80 U.S. cents through the day, he said.
The Australian dollar fell 1.4 percent to 77.34 U.S. cents as of 7:43 a.m. in Sydney from 78.43 cents in late Asian trading yesterday. It touched 77 cents, the weakest since August 2007. The currency dropped to 81.01 yen, the lowest since March 2005, before trading at 81.44 yen from 82.75 yesterday.
New Zealand's dollar weakened 1.5 percent to 65.72 U.S. cents from 66.74 cents late in Asia yesterday. It dropped 1.7 percent to 69.24 yen.
The Australian and New Zealand dollars fell as the price of gold, Australia's third most-valuable raw material export, and crude oil, its fourth most-valuable, slid in New York. Lumber, one of New Zealand's biggest export earners, plunged to a 17- year low on speculation slowing growth will limit demand for building materials.
Raw materials account for 60 percent of Australia's exports, and 70 percent of New Zealand's.
To contact the reporter on this story: Candice Zachariahs in Sydney at czachariahs2@bloomberg.net
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Euro Trades Near 13-Month Low After ECB Rate Reduction Debated
By Daniel Kruger
Oct. 3 (Bloomberg) -- The euro may fall for a fifth straight day against the dollar on speculation European financial authorities may be slower than U.S. counterparts to react to the worldwide credit crunch.
Europe's currency fell to a 13-month low against the dollar after European Central Bank President Jean-Claude Trichet said yesterday policy makers discussed cutting the main refinancing rate before holding it at a seven-year high of 4.25 percent. The dollar may fall against the yen before a U.S. report forecast to show employers eliminated jobs in September for a ninth month.
``The market is starting to lose confidence in the Europeans' ability to deal with the credit crunch as it makes its way across the Atlantic,'' said Boris Schlossberg, director of currency research at GFT Forex in New York, in an interview on Bloomberg Television.
The euro traded at $1.3819 at 6 a.m. in Tokyo, after dropping 1.4 percent yesterday and touching $1.3748, the lowest level since September 2007. The euro was at 145.60 yen, following a 1.7 percent drop yesterday, when it reached 144.89, the lowest level since June 2006. The dollar traded at 105.36 yen, after dropping 0.3 percent.
Japan's yen rose against all of the most-active currencies yesterday as stocks in the U.S., U.K., Japan, Germany and Brazil plunged, encouraging investors to sell higher-yielding assets and pay back low-cost loans in Japan. The Standard & Poor's 500 Index dropped 4 percent on a U.S. economic outlook exacerbated by a Labor Department report showing the highest number of initial jobless claims in seven years.
Stronger Yen
The yen increased 5.8 percent to 52.10 against the Brazilian real and 3.8 percent to 12.36 versus the South African rand on speculation investors will reduce carry trades in which they get funds in a country with low borrowing costs and buy assets where returns are higher. Japan's 0.5 percent target lending rate compares with 13.75 percent in Brazil and 12 percent in South Africa.
The U.S. Senate voted 74-25 on Oct. 1 in favor of legislation that links a $700 billion rescue of the financial industry to an increase in bank-deposit insurance limits and tax breaks after the House of Representatives rejected an earlier version of the bill. The House is likely to vote on the latest version today, said Brendan Daly, a spokesman for House Speaker Nancy Pelosi.
Employers in the U.S. probably eliminated 105,000 jobs last month, according to the median forecast of 76 economists surveyed by Bloomberg News. The Labor Department's report is due at 8:30 a.m. in Washington. The unemployment rate held at a five-year high of 6.1 percent, according to economists.
U.S. Jobless Claims
Initial jobless claims increased to 497,000 in the week that ended Sept. 27, the highest since September 2001, the Labor Department said yesterday.
Europe's currency has slid 5.4 percent against the dollar this week, the biggest four-day drop since the euro started trading in 1999. The decline reduces the likelihood of coordinated action by central banks to support the dollar, which has dropped more than 15 percent against the 15-nation currency in the past five years.
The implied yield on the Euribor futures contract expiring in March fell to 4.18 percent yesterday, from 4.77 percent a month ago. The euribor contract has been an average of 44 basis points, or 0.44 percentage point, higher than the ECB's overnight target during the past two years, Bloomberg data show.
``The economic outlook is subject to increasing downside risks,'' mainly ``stemming from ongoing financial-market tensions,'' Trichet said at a Frankfurt press conference following the decision to hold borrowing costs steady.
Dollar Demand
The dollar rose against all of the most-active currencies except the yen yesterday as demand for U.S. currency funding increased, reflecting banks' reluctance to lend.
The London interbank offered rate, or Libor, that banks charge each other for three-month dollar loans climbed 6 basis points to 4.21 percent yesterday, the highest since Jan. 11, the British Bankers' Association said. The corresponding rate for euros advanced 3 basis points to 5.32 percent.
Futures on the Chicago Board of Trade showed a 96 percent chance that the Fed would cut its 2 percent target rate for overnight lending between banks by a half-percentage point on Oct. 29, with the balance of bets on a quarter-point reduction. Futures showed no chance of lower rates a month ago.
``Looking at the euro against the dollar, it's like matching one dog against another dog,'' said Alan Ruskin, head of international currency strategy at RBS Greenwich Capital Markets in Greenwich, Connecticut. ``Who's got the most fleas? Dollar fundamentals don't seem to matter.''
To contact the reporter on this story: Daniel Kruger in New York at dkruger1@bloomberg.net
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Oct. 3 (Bloomberg) -- The euro may fall for a fifth straight day against the dollar on speculation European financial authorities may be slower than U.S. counterparts to react to the worldwide credit crunch.
Europe's currency fell to a 13-month low against the dollar after European Central Bank President Jean-Claude Trichet said yesterday policy makers discussed cutting the main refinancing rate before holding it at a seven-year high of 4.25 percent. The dollar may fall against the yen before a U.S. report forecast to show employers eliminated jobs in September for a ninth month.
``The market is starting to lose confidence in the Europeans' ability to deal with the credit crunch as it makes its way across the Atlantic,'' said Boris Schlossberg, director of currency research at GFT Forex in New York, in an interview on Bloomberg Television.
The euro traded at $1.3819 at 6 a.m. in Tokyo, after dropping 1.4 percent yesterday and touching $1.3748, the lowest level since September 2007. The euro was at 145.60 yen, following a 1.7 percent drop yesterday, when it reached 144.89, the lowest level since June 2006. The dollar traded at 105.36 yen, after dropping 0.3 percent.
Japan's yen rose against all of the most-active currencies yesterday as stocks in the U.S., U.K., Japan, Germany and Brazil plunged, encouraging investors to sell higher-yielding assets and pay back low-cost loans in Japan. The Standard & Poor's 500 Index dropped 4 percent on a U.S. economic outlook exacerbated by a Labor Department report showing the highest number of initial jobless claims in seven years.
Stronger Yen
The yen increased 5.8 percent to 52.10 against the Brazilian real and 3.8 percent to 12.36 versus the South African rand on speculation investors will reduce carry trades in which they get funds in a country with low borrowing costs and buy assets where returns are higher. Japan's 0.5 percent target lending rate compares with 13.75 percent in Brazil and 12 percent in South Africa.
The U.S. Senate voted 74-25 on Oct. 1 in favor of legislation that links a $700 billion rescue of the financial industry to an increase in bank-deposit insurance limits and tax breaks after the House of Representatives rejected an earlier version of the bill. The House is likely to vote on the latest version today, said Brendan Daly, a spokesman for House Speaker Nancy Pelosi.
Employers in the U.S. probably eliminated 105,000 jobs last month, according to the median forecast of 76 economists surveyed by Bloomberg News. The Labor Department's report is due at 8:30 a.m. in Washington. The unemployment rate held at a five-year high of 6.1 percent, according to economists.
U.S. Jobless Claims
Initial jobless claims increased to 497,000 in the week that ended Sept. 27, the highest since September 2001, the Labor Department said yesterday.
Europe's currency has slid 5.4 percent against the dollar this week, the biggest four-day drop since the euro started trading in 1999. The decline reduces the likelihood of coordinated action by central banks to support the dollar, which has dropped more than 15 percent against the 15-nation currency in the past five years.
The implied yield on the Euribor futures contract expiring in March fell to 4.18 percent yesterday, from 4.77 percent a month ago. The euribor contract has been an average of 44 basis points, or 0.44 percentage point, higher than the ECB's overnight target during the past two years, Bloomberg data show.
``The economic outlook is subject to increasing downside risks,'' mainly ``stemming from ongoing financial-market tensions,'' Trichet said at a Frankfurt press conference following the decision to hold borrowing costs steady.
Dollar Demand
The dollar rose against all of the most-active currencies except the yen yesterday as demand for U.S. currency funding increased, reflecting banks' reluctance to lend.
The London interbank offered rate, or Libor, that banks charge each other for three-month dollar loans climbed 6 basis points to 4.21 percent yesterday, the highest since Jan. 11, the British Bankers' Association said. The corresponding rate for euros advanced 3 basis points to 5.32 percent.
Futures on the Chicago Board of Trade showed a 96 percent chance that the Fed would cut its 2 percent target rate for overnight lending between banks by a half-percentage point on Oct. 29, with the balance of bets on a quarter-point reduction. Futures showed no chance of lower rates a month ago.
``Looking at the euro against the dollar, it's like matching one dog against another dog,'' said Alan Ruskin, head of international currency strategy at RBS Greenwich Capital Markets in Greenwich, Connecticut. ``Who's got the most fleas? Dollar fundamentals don't seem to matter.''
To contact the reporter on this story: Daniel Kruger in New York at dkruger1@bloomberg.net
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Japan's Yen, Indian Rupee, Taiwan Dollar: Asia Currency Preview
By Bob Chen
Oct. 3 (Bloomberg) -- The following events and economic reports may influence trading in Asian currencies today. Markets in China, Indonesia, Pakistan, and South Korea will be closed. Exchange rates are from the previous session.
Japanese yen: Finance Minister Shoichi Nakagawa, Economic and Fiscal Policy Minister Kaoru Yosano and Chief Cabinet Secretary Takeo Kawamura will hold briefings after a cabinet meeting this morning in Tokyo. Kawamura will hold a second briefing at 4 p.m.
The yen traded at 105.40 at 8:04 a.m. in Sydney.
Indian rupee: The commerce ministry will release inflation data for the week ended Sept. 20 at 6 p.m., spokesman Rajeev Jain said Oct. 1. India's wholesale inflation rate for that week slowed to 12.12 percent from 12.14 percent the previous week, according to a Bloomberg News survey of 18 economists.
The rupee traded at 46.63.
Taiwan dollar: The central bank will report foreign- exchange reserves for September at 4:20 p.m. Taiwan's reserves fell to $282.09 billion in August from $290.9 billion the previous month.
The Taiwan dollar traded at NT$32.16.
Thai baht: The central bank will report foreign-exchange reserves for last week at 2:30 p.m. Reserves grew to $101.5 billion in the week ended Sept. 19 from $101.4 billion the previous week.
The baht was at 34.07.
Indonesian rupiah: The central bank will report foreign- currency reserves for September as early as today. Indonesia's reserves fell to $58.36 billion in August from $60.56 billion the previous month.
The rupiah traded at 9,478.
To contact the reporter on this story: Bob Chen in Hong Kong at bchen45@bloomberg.net.
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Oct. 3 (Bloomberg) -- The following events and economic reports may influence trading in Asian currencies today. Markets in China, Indonesia, Pakistan, and South Korea will be closed. Exchange rates are from the previous session.
Japanese yen: Finance Minister Shoichi Nakagawa, Economic and Fiscal Policy Minister Kaoru Yosano and Chief Cabinet Secretary Takeo Kawamura will hold briefings after a cabinet meeting this morning in Tokyo. Kawamura will hold a second briefing at 4 p.m.
The yen traded at 105.40 at 8:04 a.m. in Sydney.
Indian rupee: The commerce ministry will release inflation data for the week ended Sept. 20 at 6 p.m., spokesman Rajeev Jain said Oct. 1. India's wholesale inflation rate for that week slowed to 12.12 percent from 12.14 percent the previous week, according to a Bloomberg News survey of 18 economists.
The rupee traded at 46.63.
Taiwan dollar: The central bank will report foreign- exchange reserves for September at 4:20 p.m. Taiwan's reserves fell to $282.09 billion in August from $290.9 billion the previous month.
The Taiwan dollar traded at NT$32.16.
Thai baht: The central bank will report foreign-exchange reserves for last week at 2:30 p.m. Reserves grew to $101.5 billion in the week ended Sept. 19 from $101.4 billion the previous week.
The baht was at 34.07.
Indonesian rupiah: The central bank will report foreign- currency reserves for September as early as today. Indonesia's reserves fell to $58.36 billion in August from $60.56 billion the previous month.
The rupiah traded at 9,478.
To contact the reporter on this story: Bob Chen in Hong Kong at bchen45@bloomberg.net.
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Australia Stocks Preview: BHP, James Hardie, Roc Oil, Woodside
By Shani Raja
Oct. 3 (Bloomberg) -- The following is a list of companies whose shares may rise or fall in Australia. This preview includes news announced after markets closed yesterday. Prices are from yesterday's close unless otherwise stated.
The S&P/ASX 200 Index futures contract due in December fell 2 percent to 4,680 at 6:59 a.m. in Sydney. The Bank of New York Australia ADR Index plunged 9.3 percent in New York.
The S&P/ASX 200 Index declined 33.50 points, or 0.7 percent, to 4,761.10.
Mining shares: A measure of six metals traded on the London Metal Exchange fell 1.5 percent. Zinc slumped 5.3 percent, copper 5 percent.
American depositary receipts of BHP Billiton Ltd. (BHP AU), the world's largest mining company, tumbled 11 percent to the equivalent of A$29.62 a share in New York, A$2.05 lower than the A$31.67 close in Sydney.
Rio Tinto Group (RIO AU) fell A$3.75, or 4 percent, to A$91.25.
U.S.-linked stocks: U.S. stocks dropped for a second day as a jump in borrowing costs and reports showing a worsening economy spurred concern that the government's $700 billion bank bailout plan won't be enough to stimulate growth. The Standard & Poor's 500 Index fell 46.78, or 4 percent, to 1,114.28.
James Hardie Industries NV (JHX AU), the biggest seller of home siding in the U.S., dropped 17 cents, or 3.2 percent, to A$5.13. Westfield Group (WDC AU), which owns 59 shopping malls in the U.S., advanced 52 cents, or 3 percent, to A$18.08.
Financial stocks: The spread between the rate on a two-year interest-rate swap and U.S. Treasury yields surged to a record as money-market rates climbed and concern increased about the success of a proposed U.S. financial-rescue package.
National Australia Bank Ltd. (NAB AU), the nation's largest lender, was unchanged at A$25.70.
Oil companies: Crude oil for November delivery fell 4.6 percent to $93.97 a barrel at 2:41 p.m. in New York, the lowest settlement price since Sept. 16, on concern consumption will drop because of slower economic growth.
Woodside Petroleum Ltd. (WPL AU), operator of Australia's A$25 billion ($20 billion) North West Shelf liquefied natural gas venture, lost 72 cents, or 1.4 percent, to A$51.48.
Roc Oil Co. (ROC AU), the Australian explorer active in Mauritania, China and Angola, said it's seeking opportunities to invest in development projects in Asia and Africa to boost production and reduce risk. Roc shares slumped 6 cents, or 6 percent, to 94 cents.
To contact the reporter on this story: Shani Raja in Sydney at sraja4@bloomberg.net.
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Oct. 3 (Bloomberg) -- The following is a list of companies whose shares may rise or fall in Australia. This preview includes news announced after markets closed yesterday. Prices are from yesterday's close unless otherwise stated.
The S&P/ASX 200 Index futures contract due in December fell 2 percent to 4,680 at 6:59 a.m. in Sydney. The Bank of New York Australia ADR Index plunged 9.3 percent in New York.
The S&P/ASX 200 Index declined 33.50 points, or 0.7 percent, to 4,761.10.
Mining shares: A measure of six metals traded on the London Metal Exchange fell 1.5 percent. Zinc slumped 5.3 percent, copper 5 percent.
American depositary receipts of BHP Billiton Ltd. (BHP AU), the world's largest mining company, tumbled 11 percent to the equivalent of A$29.62 a share in New York, A$2.05 lower than the A$31.67 close in Sydney.
Rio Tinto Group (RIO AU) fell A$3.75, or 4 percent, to A$91.25.
U.S.-linked stocks: U.S. stocks dropped for a second day as a jump in borrowing costs and reports showing a worsening economy spurred concern that the government's $700 billion bank bailout plan won't be enough to stimulate growth. The Standard & Poor's 500 Index fell 46.78, or 4 percent, to 1,114.28.
James Hardie Industries NV (JHX AU), the biggest seller of home siding in the U.S., dropped 17 cents, or 3.2 percent, to A$5.13. Westfield Group (WDC AU), which owns 59 shopping malls in the U.S., advanced 52 cents, or 3 percent, to A$18.08.
Financial stocks: The spread between the rate on a two-year interest-rate swap and U.S. Treasury yields surged to a record as money-market rates climbed and concern increased about the success of a proposed U.S. financial-rescue package.
National Australia Bank Ltd. (NAB AU), the nation's largest lender, was unchanged at A$25.70.
Oil companies: Crude oil for November delivery fell 4.6 percent to $93.97 a barrel at 2:41 p.m. in New York, the lowest settlement price since Sept. 16, on concern consumption will drop because of slower economic growth.
Woodside Petroleum Ltd. (WPL AU), operator of Australia's A$25 billion ($20 billion) North West Shelf liquefied natural gas venture, lost 72 cents, or 1.4 percent, to A$51.48.
Roc Oil Co. (ROC AU), the Australian explorer active in Mauritania, China and Angola, said it's seeking opportunities to invest in development projects in Asia and Africa to boost production and reduce risk. Roc shares slumped 6 cents, or 6 percent, to 94 cents.
To contact the reporter on this story: Shani Raja in Sydney at sraja4@bloomberg.net.
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Brazilian Stocks Plunge on Credit Concerns, Led by Retailers
By Paulo Winterstein and William Freebairn
Oct. 2 (Bloomberg) -- Brazilian stocks plunged, sending the Bovespa index toward its biggest weekly decline in four years, as commodity prices slid and Citigroup Inc. told investors to sell consumer shares on concern the credit crisis will choke off borrowing and spending.
Lojas Renner SA led declines in retailers after Citigroup said Brazil is ``exposed to a drying-up of credit flows.'' Cia. Vale do Rio Doce, the world's biggest iron-ore producer, dropped after Merrill Lynch & Co. said slowing demand may lead to lower- than-expected ore price increases next year. Petroleo Brasileiro SA, Brazil's state-controlled oil company, tumbled as crude prices slumped for a second day.
``The dominant question is the scenario that's unfolding in the U.S.,'' said Guilherme Figueiredo, who helps manage about $1 billion at M. Safra & Co in Sao Paulo. ``The worse things get in the U.S., the worse the credit situation gets here.''
The Bovespa index dropped 3,653.55, or 7.3 percent, to 46,145.1, as only three of the 66 shares in the benchmark gained. The index has lost 9.1 percent this week, the steepest weekly retreat since April 2004. The BM&FBovespa MidLarge Cap index dropped 6.9 percent, while the BM&FBovespa Small Cap index fell 7.7 percent. Mexico's Bolsa declined 4.3 percent.
The Bovespa index lost 11 percent in September, the worst performance in more than four years, after mounting credit losses, the collapse of financial companies worldwide and a jump in banks' borrowing costs prompted investors to shun riskier assets, such as emerging markets stocks and bonds.
Credit Dries Up
``Brazil appears exposed to a drying-up of credit flows given high debt ratios, short term debt repayments and variable cash flow generation,'' Citigroup strategist Geoffrey Dennis wrote in a note to clients. He also downgraded energy stocks to ``underweight'' from ``neutral.''
Lojas Americanas SA, the biggest discount retailer, dropped 11 percent to 7.85 reais. Lojas Renner, the biggest publicly traded clothing retailer, fell 16 percent to 20.15 reais. B2W Cia. Global do Varejo, the largest Internet retailer, fell 11 percent to 42.10 reais.
Renner said Sept. 30 it had renegotiated its purchase of rival Leader SA Empreendimentos e Participacoes to avoid raising money in credit markets.
``The retailers are already feeling'' the effects of costlier credit, Figueiredo said in a phone interview. ``They're going to have to start using their own capital and de-leverage one way or another.''
Jobless Claims
The cost of borrowing in dollars in London for three months rose for a fourth day, signaling that banks haven't started to lend after the U.S. Senate approved a $700 billion plan to rescue beleaguered financial institutions. In the U.S., jobless claims climbed to a seven-year high and factory orders slumped more than economists forecast. Brazil's industrial output fell 1.3 percent in August, the first drop this year, as the economy showed signs of cooling.
Gafisa SA, Brazil's second-biggest homebuilder, dropped 14 percent to 20.57 reais, leading declines among real estate developers. Along with retailers, builders may suffer from higher credit costs because of the large amounts of cash flow needed to fund operations.
Cyrela Brazil Realty SA Empreendimentos e Participacoes, the biggest Brazilian homebuilder, fell 8.9 percent to 17.95 reais. Rossi Residencial SA, the third-biggest, dropped 9.4 percent to 4.52 reais.
Ore Prices
Vale slid 10 percent to 29.40 reais. Australian producers, including Rio Tinto Group and BHP Billiton Ltd., may win a 10 percent jump in contract prices, down from a previous estimate of 15 percent, Merrill Lynch analysts led by Vicky Binns said in a report dated yesterday. Vale may not get an increase next year, assuming it wins a planned 12 percent raise this half, she said.
Petrobras fell 8.2 percent to 32.05 reais. Oil dropped more than 4 percent as the dollar reached a one-year high against the euro and U.S. fuel demand dropped to the lowest since the last recession.
Mexico's Bolsa index fell for the first time in three days, as copper miner Grupo Mexico SAB dropped with metal prices.
Grupo Mexico, the country's biggest mining company, fell for the third time this week. Copper tumbled to a 19-month low in New York.
Spending Concern
Retailers fell, led by Grupo Famsa SAB and Controladora Comercial Mexicana SAB on concern slowing consumer spending will curb profits. Famsa fell to a two-year low after Citigroup Inc. downgraded the stock to ``hold'' from ``buy,'' citing high levels of debt and concern a prolonged slowdown will hurt sales. Comercial Mexicana declined for the first time in three days as Credit Suisse Group AG said its September sale growth lagged behind that of competitors.
Grupo Mexico fell 8.9 percent to 10.32 pesos. Famsa declined 5.4 percent to 21.96 pesos. Comercial Mexicana dropped 6.9 percent to 24.36 pesos.
Sociedad Quimica y Minera de Chile SA fell the most in 13 years in Santiago trading on concern slowing global growth will stifle demand for the fertilizer it produces. Soquimich, as the company is known, fell 16 percent to 11,789 pesos.
In other Latin American markets, Argentina's Merval index dropped 5.3 percent, Chile's Ipsa fell 3.9 percent, Colombia's IGBC slipped 0.9 percent and Peru's Lima General index dropped 4.4 percent. The MSCI index of Latin American shares tumbled 9.3 percent.
To contact the reporters on this story: Paulo Winterstein in Sao Paulo at pwinterstein@bloomberg.net; William Freebairn in Mexico City at wfreebairn@bloomberg.net.
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Oct. 2 (Bloomberg) -- Brazilian stocks plunged, sending the Bovespa index toward its biggest weekly decline in four years, as commodity prices slid and Citigroup Inc. told investors to sell consumer shares on concern the credit crisis will choke off borrowing and spending.
Lojas Renner SA led declines in retailers after Citigroup said Brazil is ``exposed to a drying-up of credit flows.'' Cia. Vale do Rio Doce, the world's biggest iron-ore producer, dropped after Merrill Lynch & Co. said slowing demand may lead to lower- than-expected ore price increases next year. Petroleo Brasileiro SA, Brazil's state-controlled oil company, tumbled as crude prices slumped for a second day.
``The dominant question is the scenario that's unfolding in the U.S.,'' said Guilherme Figueiredo, who helps manage about $1 billion at M. Safra & Co in Sao Paulo. ``The worse things get in the U.S., the worse the credit situation gets here.''
The Bovespa index dropped 3,653.55, or 7.3 percent, to 46,145.1, as only three of the 66 shares in the benchmark gained. The index has lost 9.1 percent this week, the steepest weekly retreat since April 2004. The BM&FBovespa MidLarge Cap index dropped 6.9 percent, while the BM&FBovespa Small Cap index fell 7.7 percent. Mexico's Bolsa declined 4.3 percent.
The Bovespa index lost 11 percent in September, the worst performance in more than four years, after mounting credit losses, the collapse of financial companies worldwide and a jump in banks' borrowing costs prompted investors to shun riskier assets, such as emerging markets stocks and bonds.
Credit Dries Up
``Brazil appears exposed to a drying-up of credit flows given high debt ratios, short term debt repayments and variable cash flow generation,'' Citigroup strategist Geoffrey Dennis wrote in a note to clients. He also downgraded energy stocks to ``underweight'' from ``neutral.''
Lojas Americanas SA, the biggest discount retailer, dropped 11 percent to 7.85 reais. Lojas Renner, the biggest publicly traded clothing retailer, fell 16 percent to 20.15 reais. B2W Cia. Global do Varejo, the largest Internet retailer, fell 11 percent to 42.10 reais.
Renner said Sept. 30 it had renegotiated its purchase of rival Leader SA Empreendimentos e Participacoes to avoid raising money in credit markets.
``The retailers are already feeling'' the effects of costlier credit, Figueiredo said in a phone interview. ``They're going to have to start using their own capital and de-leverage one way or another.''
Jobless Claims
The cost of borrowing in dollars in London for three months rose for a fourth day, signaling that banks haven't started to lend after the U.S. Senate approved a $700 billion plan to rescue beleaguered financial institutions. In the U.S., jobless claims climbed to a seven-year high and factory orders slumped more than economists forecast. Brazil's industrial output fell 1.3 percent in August, the first drop this year, as the economy showed signs of cooling.
Gafisa SA, Brazil's second-biggest homebuilder, dropped 14 percent to 20.57 reais, leading declines among real estate developers. Along with retailers, builders may suffer from higher credit costs because of the large amounts of cash flow needed to fund operations.
Cyrela Brazil Realty SA Empreendimentos e Participacoes, the biggest Brazilian homebuilder, fell 8.9 percent to 17.95 reais. Rossi Residencial SA, the third-biggest, dropped 9.4 percent to 4.52 reais.
Ore Prices
Vale slid 10 percent to 29.40 reais. Australian producers, including Rio Tinto Group and BHP Billiton Ltd., may win a 10 percent jump in contract prices, down from a previous estimate of 15 percent, Merrill Lynch analysts led by Vicky Binns said in a report dated yesterday. Vale may not get an increase next year, assuming it wins a planned 12 percent raise this half, she said.
Petrobras fell 8.2 percent to 32.05 reais. Oil dropped more than 4 percent as the dollar reached a one-year high against the euro and U.S. fuel demand dropped to the lowest since the last recession.
Mexico's Bolsa index fell for the first time in three days, as copper miner Grupo Mexico SAB dropped with metal prices.
Grupo Mexico, the country's biggest mining company, fell for the third time this week. Copper tumbled to a 19-month low in New York.
Spending Concern
Retailers fell, led by Grupo Famsa SAB and Controladora Comercial Mexicana SAB on concern slowing consumer spending will curb profits. Famsa fell to a two-year low after Citigroup Inc. downgraded the stock to ``hold'' from ``buy,'' citing high levels of debt and concern a prolonged slowdown will hurt sales. Comercial Mexicana declined for the first time in three days as Credit Suisse Group AG said its September sale growth lagged behind that of competitors.
Grupo Mexico fell 8.9 percent to 10.32 pesos. Famsa declined 5.4 percent to 21.96 pesos. Comercial Mexicana dropped 6.9 percent to 24.36 pesos.
Sociedad Quimica y Minera de Chile SA fell the most in 13 years in Santiago trading on concern slowing global growth will stifle demand for the fertilizer it produces. Soquimich, as the company is known, fell 16 percent to 11,789 pesos.
In other Latin American markets, Argentina's Merval index dropped 5.3 percent, Chile's Ipsa fell 3.9 percent, Colombia's IGBC slipped 0.9 percent and Peru's Lima General index dropped 4.4 percent. The MSCI index of Latin American shares tumbled 9.3 percent.
To contact the reporters on this story: Paulo Winterstein in Sao Paulo at pwinterstein@bloomberg.net; William Freebairn in Mexico City at wfreebairn@bloomberg.net.
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Canadian Stocks Fall Most Since 2000 as Potash, Barrick Slump
By John Kipphoff
Oct. 2 (Bloomberg) -- Canadian stocks tumbled the most in almost eight years, led by a record drop in raw-material shares, as tighter credit, rising unemployment and lower home prices threatened to tip the U.S. into a recession.
Potash Corp. of Saskatchewan Inc. fell the most since 1989 after rival Mosaic Co. posted profit that missed analysts' estimates and cut its sales forecast. Barrick Gold Corp. plunged the most in two decades as bullion declined on speculation the U.S. will approve a $700 billion plan to revive credit markets, reducing the metal's appeal.
Suncor Energy Inc. touched the lowest in 15 years, leading oil and gas producers lower as crude fell below $95 a barrel and Merrill Lynch & Co. said it may drop to $50. The Standard & Poor's/TSX Composite Index fell 7 percent to 10,900.54 in Toronto, the most since Oct. 25, 2000.
``Commodities are getting pummeled,'' said Martin Anstee, a fund manager at Stone Asset Management in Toronto, which oversees about $800 million. ``People are forecasting a wall of recession, which means lower commodity prices. We had a good run on higher commodities -- now we're taking it in the neck.''
Canada's main stock benchmark has slid 28 percent from its June 18 record to the lowest since November 2005, entering a bear market last month as slumping commodities dragged down the materials and energy shares that account for more than two- fifths of its value. The S&P/TSX is still trading 91 percent higher than in October 2002, when the last bull market began.
Potash, the largest crop nutrient maker, fell 26 percent to C$101.21 for its worst loss since trading began in November 1989.
Fertilizer Rout
Agrium Inc., North America's third-biggest fertilizer company, slid 23 percent to C$45.01 for its steepest drop since March 1989. Merrill Lynch & Co. analysts cut their Mosaic, Potash and Agrium recommendations to ``underperform'' from ``buy'' on concern that slumping prices and lower demand may hurt profit.
Energy, metals and agricultural commodities comprise more than half Canada's exports. The U.S. buys about three quarters of the total. A gauge of materials stocks slid 17 percent for its steepest intraday drop since the index's start in 1995.
The London interbank offered rate that banks charge each other for loans rose for a fourth day, intensifying a global credit squeeze. First-time jobless benefits applications rose to a seven-year high in the U.S., and factory orders in August fell by the most in almost two years as business spending slowed.
Gold futures for December delivery fell 4.8 percent to $844.30 an ounce in New York. Copper and corn prices plunged.
Miners Slump
Barrick Gold, the biggest bullion producer, dropped 16 percent to C$33.25, the most in almost 21 years. Goldcorp Inc., the second-biggest by market value, fell 20 percent to C$27.51 for its worst drop since 1994. Yamana Gold Inc. slid 19 percent to C$7.20.
FNX Mining Co., a producer of nickel and copper ore, retreated 20 percent to C$8.70, the most since December 2000.
An index of energy stocks slid 7.6 percent and touched the lowest in almost three years. Oil dropped 4.6 percent to $93.97 a barrel in New York after the U.S. dollar reached a one-year high against the euro and U.S. fuel demand dropped to the lowest since the last recession. Oil, up 17 percent from a year ago, has fallen 36 percent from a record $147.27 on July 11.
Suncor fell 12 percent to C$36 and earlier dropped 13 percent for its biggest intra-day drop since trading began in February 1991. The second-largest oil-sands mining company fell even after it was added to Goldman, Sachs & Co.'s ``Conviction Buy'' list, as analysts said the shares are ``oversold.''
EnCana Corp., Canada's biggest energy company by market value, fell 9.2 percent to C$59.46. Canadian Natural Resources Ltd. decreased 8.9 percent to C$65.11.
`Unlikely' Scenario
Crude-oil may fall as low as $50 next year, about half the current level, in the ``unlikely'' event of a global recession, weighing on shares of petroleum producers, Merrill Lynch analysts Mark Hume and Alexis Clark wrote in a report.
``People are going from bulls to bears -- that's got people scared,'' Anstee said. ``We'll have a slowdown yes, but not a deep recession. I bought some Agrium this morning and I'm sorely tempted on Potash. People think that maybe Suncor and the other oil-sands guys won't be able to finance their expansions. I think Suncor below C$40 is getting attractive.''
Financial companies, the biggest industry in the S&P/TSX with a 33 percent weighting, fell 3.4 percent today.
Royal Bank of Canada, the country's largest lender by assets, slid 3.8 percent to C$48.95. Manulife Financial Corp., Canada's biggest insurance company, dropped 4.6 percent to C$37.21. GMP Capital Trust, an independent securities firm, retreated 13 percent to C$8.86, the lowest in four years.
To contact the reporter on this story: John Kipphoff in Montreal at jkipphoff@bloomberg.net.
Read more...
Oct. 2 (Bloomberg) -- Canadian stocks tumbled the most in almost eight years, led by a record drop in raw-material shares, as tighter credit, rising unemployment and lower home prices threatened to tip the U.S. into a recession.
Potash Corp. of Saskatchewan Inc. fell the most since 1989 after rival Mosaic Co. posted profit that missed analysts' estimates and cut its sales forecast. Barrick Gold Corp. plunged the most in two decades as bullion declined on speculation the U.S. will approve a $700 billion plan to revive credit markets, reducing the metal's appeal.
Suncor Energy Inc. touched the lowest in 15 years, leading oil and gas producers lower as crude fell below $95 a barrel and Merrill Lynch & Co. said it may drop to $50. The Standard & Poor's/TSX Composite Index fell 7 percent to 10,900.54 in Toronto, the most since Oct. 25, 2000.
``Commodities are getting pummeled,'' said Martin Anstee, a fund manager at Stone Asset Management in Toronto, which oversees about $800 million. ``People are forecasting a wall of recession, which means lower commodity prices. We had a good run on higher commodities -- now we're taking it in the neck.''
Canada's main stock benchmark has slid 28 percent from its June 18 record to the lowest since November 2005, entering a bear market last month as slumping commodities dragged down the materials and energy shares that account for more than two- fifths of its value. The S&P/TSX is still trading 91 percent higher than in October 2002, when the last bull market began.
Potash, the largest crop nutrient maker, fell 26 percent to C$101.21 for its worst loss since trading began in November 1989.
Fertilizer Rout
Agrium Inc., North America's third-biggest fertilizer company, slid 23 percent to C$45.01 for its steepest drop since March 1989. Merrill Lynch & Co. analysts cut their Mosaic, Potash and Agrium recommendations to ``underperform'' from ``buy'' on concern that slumping prices and lower demand may hurt profit.
Energy, metals and agricultural commodities comprise more than half Canada's exports. The U.S. buys about three quarters of the total. A gauge of materials stocks slid 17 percent for its steepest intraday drop since the index's start in 1995.
The London interbank offered rate that banks charge each other for loans rose for a fourth day, intensifying a global credit squeeze. First-time jobless benefits applications rose to a seven-year high in the U.S., and factory orders in August fell by the most in almost two years as business spending slowed.
Gold futures for December delivery fell 4.8 percent to $844.30 an ounce in New York. Copper and corn prices plunged.
Miners Slump
Barrick Gold, the biggest bullion producer, dropped 16 percent to C$33.25, the most in almost 21 years. Goldcorp Inc., the second-biggest by market value, fell 20 percent to C$27.51 for its worst drop since 1994. Yamana Gold Inc. slid 19 percent to C$7.20.
FNX Mining Co., a producer of nickel and copper ore, retreated 20 percent to C$8.70, the most since December 2000.
An index of energy stocks slid 7.6 percent and touched the lowest in almost three years. Oil dropped 4.6 percent to $93.97 a barrel in New York after the U.S. dollar reached a one-year high against the euro and U.S. fuel demand dropped to the lowest since the last recession. Oil, up 17 percent from a year ago, has fallen 36 percent from a record $147.27 on July 11.
Suncor fell 12 percent to C$36 and earlier dropped 13 percent for its biggest intra-day drop since trading began in February 1991. The second-largest oil-sands mining company fell even after it was added to Goldman, Sachs & Co.'s ``Conviction Buy'' list, as analysts said the shares are ``oversold.''
EnCana Corp., Canada's biggest energy company by market value, fell 9.2 percent to C$59.46. Canadian Natural Resources Ltd. decreased 8.9 percent to C$65.11.
`Unlikely' Scenario
Crude-oil may fall as low as $50 next year, about half the current level, in the ``unlikely'' event of a global recession, weighing on shares of petroleum producers, Merrill Lynch analysts Mark Hume and Alexis Clark wrote in a report.
``People are going from bulls to bears -- that's got people scared,'' Anstee said. ``We'll have a slowdown yes, but not a deep recession. I bought some Agrium this morning and I'm sorely tempted on Potash. People think that maybe Suncor and the other oil-sands guys won't be able to finance their expansions. I think Suncor below C$40 is getting attractive.''
Financial companies, the biggest industry in the S&P/TSX with a 33 percent weighting, fell 3.4 percent today.
Royal Bank of Canada, the country's largest lender by assets, slid 3.8 percent to C$48.95. Manulife Financial Corp., Canada's biggest insurance company, dropped 4.6 percent to C$37.21. GMP Capital Trust, an independent securities firm, retreated 13 percent to C$8.86, the lowest in four years.
To contact the reporter on this story: John Kipphoff in Montreal at jkipphoff@bloomberg.net.
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U.S. Stocks Decline on Concern Bank Rescue Won't Stop Slowdown
By Lynn Thomasson
Oct. 2 (Bloomberg) -- U.S. stocks dropped for a second day as a jump in borrowing costs and reports showing a worsening economy spurred concern that the government's $700 billion bank bailout plan won't be enough to stimulate growth.
Caterpillar Inc., Alcoa Inc. and Deere & Co. tumbled more than 8 percent as three-month bank lending rates climbed to the highest since January, while the government said factory orders declined more than forecast. General Electric Co. plunged 9.6 percent after selling $12.2 billion in shares at a discount. Monsanto Co. slid 16 percent, its steepest loss since going public in 2000, after Merrill Lynch & Co. said slumping demand will hurt farm companies.
``If banks aren't willing to lend money to a bank, are they going to be willing to lend to an average person? No, they're not,'' said Frank Ingarra, money manager at Hennessy Advisors Inc., which oversees $1.1 billion in Novato, California. ``We could be at the start of a pretty bad recession.''
The Standard & Poor's 500 Index fell 46.78, or 4 percent, to 1,114.28. The Dow Jones Industrial Average declined 348.22, or 3.2 percent, to 10,482.85. The Nasdaq Composite Index slipped 4.5 percent to 1,976.72. Almost 14 stocks retreated for each that rose on the New York Stock Exchange.
The S&P 500 has slumped 24 percent this year as the subprime mortgage crisis brought down banks including Lehman Brothers Holdings Inc. and made borrowing more expensive. The index lost 8.1 percent over the past four days and is poised for its worst weekly retreat since the markets reopened after the Sept. 11, 2001, terrorist attacks.
Switzerland, Jordan
The benchmark gauge for U.S. stocks still trades for 21 times profit from the past 12 months. Only four of 48 developed and emerging nations tracked by MSCI Inc. -- Switzerland, Jordan, Colombia and Morocco -- have a higher price-to-earnings ratio, according to data compiled by Bloomberg.
All but 36 stocks in the S&P 500 fell today and its 10 major industry groups retreated more than 1 percent each. Commodities from oil to gold, corn and lumber also slumped.
Caterpillar, the biggest maker of earthmoving equipment, lost $4.73 to $52.22. Deere, the largest producer of tractors, declined 14 percent to $39.72.
The cost of borrowing in dollars in London for three months rose for a fourth day, signaling that banks haven't started to lend even after the U.S. Senate approved the plan to rescue beleaguered financial institutions. The three-month London interbank offered rate, or Libor, that banks charge each other for such loans climbed 6 basis points to 4.21 percent today, the highest since Jan. 11.
`Liquidity Crisis'
The market for commercial paper plummeted the most on record as banks and insurers were unable to find buyers for the short- term debt. Commercial paper outstanding tumbled $94.9 billion, or 5.6 percent, to a seasonally adjusted three-year low of $1.6 trillion for the week ended Oct. 1, the Federal Reserve said. Financial paper accounted for most of the decline.
``There's a liquidity crisis going on that's putting investors on edge,'' said Alan Gayle, the Richmond, Virginia- based senior investment strategist at Ridgeworth Investments, which oversees about $70 billion. ``Liquidity is like oxygen. Lack of it can cause serious damage in a very short time.''
The S&P 500 Industrials Index lost 6.8 percent, its steepest retreat since 2001, after the 4 percent decrease in bookings at factories topped the average forecast of economists in a Bloomberg survey. A separate government report showed first-time claims for unemployment benefits climbed to a seven-year high.
Jobs Report
Investors can expect more details tomorrow when the government releases its monthly jobs report at 8:30 a.m. New York time. The U.S. may have lost 105,000 jobs in September, the ninth consecutive decline, economists surveyed by Bloomberg forecast.
Billionaire Warren Buffett, the preeminent stock picker, described the world's largest economy yesterday as being ``flat on the floor'' after a cardiac arrest.
GE, which got a $3 billion investment from Buffett's Berkshire Hathaway Inc. yesterday, dropped $2.35 to $22.15. The company sold stock today at a 9.2 percent discount to yesterday's closing price as it seeks to fund its operations. GE's shares trade at a valuation of less than 10 times trailing earnings, the lowest since Bloomberg began tracking the data in 1990.
Raw-material producers in the S&P 500 sank to the lowest level since 2005, falling 8 percent as a group, after Merrill downgraded fertilizer stocks to ``underperform'' and Mosaic Co., the world's largest maker of phosphates, reported weaker-than- estimated earnings. The group's retreat was the steepest among 10 industries in the S&P 500.
Monsanto, Mosaic
Merrill analysts cut their rating on Monsanto, the world's biggest seed producer, to ``neutral'' from ``buy,'' sending its shares down as much as 21 percent. The stock pared the loss, ending the day at $82.01 with a 16 percent decline, after the company said fiscal 2008 profit was about $3.64 a share, up from a previous estimate of as much as $3.60.
Mosaic tumbled 41 percent to $39.65, its steepest retreat since its shares began trading in 2004. CF Industries Holdings Inc., a maker of nitrogen and phosphate fertilizers, slumped 35 percent to $58, the most since its initial public offering in 2005.
Alcoa slumped 8.9 percent to $19.38 after Goldman Sachs Group Inc. downgraded the largest U.S. aluminum producer to ``neutral'' from ``buy'' on concern metal demand will fall along with the weakening economy.
AK Steel Holding Corp., the No. 3 U.S.-based producer of the metal, fell 17 percent to $20.27.
Transporters Plunge
The Dow Jones Transportation Average lost 8.7 percent for the biggest drop in seven years. Con-way Inc., the second-largest U.S. trucking company, cut its annual profit outlook because of less freight demand and led the decline in the index of railroads, airlines and shippers. Con-way shares fell 20 percent to $34.16.
EBay Inc., the largest Internet auction company, lost 8.2 percent to $19.15. The shares were downgraded to ``equal-weight'' from ``overweight'' at Morgan Stanley, which said ``trends deteriorated more than expected'' in the third quarter.
International Business Machines Corp. had a second day of losses greater than 4 percent. The world's biggest seller of computer services fell $5.39 to $104.74 after Barclays Plc analysts cut third-quarter profit estimates for the company on slowing computer hardware and software sales.
All but two technology stocks in the S&P 500 retreated. The group slipped 4.4 percent.
`Hold My Nose'
The financial-market rescue legislation, which the House likely will act on tomorrow, passed the Senate on a 74-25 vote. It would give the Treasury Department authority to buy assets including mortgage-backed securities that are burdening financial institutions. The Senate added tax provisions to entice Republican votes in the House, where an earlier version of the bill failed on Sept. 29 and sank the Dow average by 777 points.
``If I were a congressman I would hold my nose and vote yes, but people shouldn't be under any illusions about what's going to happen,'' Charles Bobrinskoy, who helps manage about $13 billion as vice chairman of Ariel Investments in Chicago, told Bloomberg Television.
The U.S. Securities and Exchange said it will extend a prohibition on short-sales of financial stocks, keeping restrictions on bets against companies' shares in place while Congress works on the bailout plan. A gauge of 969 stocks on the no-short list lost 4.5 percent.
General Growth Properties Inc. had the biggest decline in the S&P 500. The mall owner slumped for a second day after proxy adviser Glass, Lewis & Co. said the company should have a ban on short selling its stock dropped. The shares fell the most since becoming publicly traded in 1993, losing 48 percent to $7.59.
Oil's $4 Decline
The more than $4 retreat in oil pushed the 40-company S&P 500 energy producers index to a 5.9 percent loss. Oilfield- service providers led the decline after Merrill analysts cut their share forecast for the group and said the credit crunch and investors' aversion to risk may push down demand for oil.
Schlumberger Ltd., the world's largest oilfield contractor, had a decline of as much as 9.2 percent. Weatherford International Ltd., another oilfield-services company, tumbled 21 percent to $18.53. Exxon Mobil Corp., the world's largest oil company, slipped 1.4 percent to $77.50.
Regions Financial Corp., Alabama's biggest bank, rallied 13 percent to $11.85 for the second-biggest advance in the S&P 500. Sanford C. Bernstein & Co. said the lender would be among the biggest beneficiaries of a higher limit on federal deposit insurance.
Sovereign Bancorp Inc., the second-largest U.S. savings and loan, jumped 8.9 percent to $5.25 after Friedman, Billings, Ramsey & Co. boosted the stock's rating to ``market perform'' from ``underperform,'' citing ``relative stability'' in the company's deposit base.
Constellation Energy Group Inc. had the top gain in the S&P 500, adding 15 percent to $27.23. Electricite de France SA, the world's biggest operator of nuclear reactors, is still assessing its options with buyout firm KKR & Co. in relation to Constellation after its takeover approach was rebuffed in favor of an offer from Buffett's MidAmerican Energy Holdings Co.
To contact the reporter on this story: Lynn Thomasson in New York at lthomasson@bloomberg.net.
Read more...
Oct. 2 (Bloomberg) -- U.S. stocks dropped for a second day as a jump in borrowing costs and reports showing a worsening economy spurred concern that the government's $700 billion bank bailout plan won't be enough to stimulate growth.
Caterpillar Inc., Alcoa Inc. and Deere & Co. tumbled more than 8 percent as three-month bank lending rates climbed to the highest since January, while the government said factory orders declined more than forecast. General Electric Co. plunged 9.6 percent after selling $12.2 billion in shares at a discount. Monsanto Co. slid 16 percent, its steepest loss since going public in 2000, after Merrill Lynch & Co. said slumping demand will hurt farm companies.
``If banks aren't willing to lend money to a bank, are they going to be willing to lend to an average person? No, they're not,'' said Frank Ingarra, money manager at Hennessy Advisors Inc., which oversees $1.1 billion in Novato, California. ``We could be at the start of a pretty bad recession.''
The Standard & Poor's 500 Index fell 46.78, or 4 percent, to 1,114.28. The Dow Jones Industrial Average declined 348.22, or 3.2 percent, to 10,482.85. The Nasdaq Composite Index slipped 4.5 percent to 1,976.72. Almost 14 stocks retreated for each that rose on the New York Stock Exchange.
The S&P 500 has slumped 24 percent this year as the subprime mortgage crisis brought down banks including Lehman Brothers Holdings Inc. and made borrowing more expensive. The index lost 8.1 percent over the past four days and is poised for its worst weekly retreat since the markets reopened after the Sept. 11, 2001, terrorist attacks.
Switzerland, Jordan
The benchmark gauge for U.S. stocks still trades for 21 times profit from the past 12 months. Only four of 48 developed and emerging nations tracked by MSCI Inc. -- Switzerland, Jordan, Colombia and Morocco -- have a higher price-to-earnings ratio, according to data compiled by Bloomberg.
All but 36 stocks in the S&P 500 fell today and its 10 major industry groups retreated more than 1 percent each. Commodities from oil to gold, corn and lumber also slumped.
Caterpillar, the biggest maker of earthmoving equipment, lost $4.73 to $52.22. Deere, the largest producer of tractors, declined 14 percent to $39.72.
The cost of borrowing in dollars in London for three months rose for a fourth day, signaling that banks haven't started to lend even after the U.S. Senate approved the plan to rescue beleaguered financial institutions. The three-month London interbank offered rate, or Libor, that banks charge each other for such loans climbed 6 basis points to 4.21 percent today, the highest since Jan. 11.
`Liquidity Crisis'
The market for commercial paper plummeted the most on record as banks and insurers were unable to find buyers for the short- term debt. Commercial paper outstanding tumbled $94.9 billion, or 5.6 percent, to a seasonally adjusted three-year low of $1.6 trillion for the week ended Oct. 1, the Federal Reserve said. Financial paper accounted for most of the decline.
``There's a liquidity crisis going on that's putting investors on edge,'' said Alan Gayle, the Richmond, Virginia- based senior investment strategist at Ridgeworth Investments, which oversees about $70 billion. ``Liquidity is like oxygen. Lack of it can cause serious damage in a very short time.''
The S&P 500 Industrials Index lost 6.8 percent, its steepest retreat since 2001, after the 4 percent decrease in bookings at factories topped the average forecast of economists in a Bloomberg survey. A separate government report showed first-time claims for unemployment benefits climbed to a seven-year high.
Jobs Report
Investors can expect more details tomorrow when the government releases its monthly jobs report at 8:30 a.m. New York time. The U.S. may have lost 105,000 jobs in September, the ninth consecutive decline, economists surveyed by Bloomberg forecast.
Billionaire Warren Buffett, the preeminent stock picker, described the world's largest economy yesterday as being ``flat on the floor'' after a cardiac arrest.
GE, which got a $3 billion investment from Buffett's Berkshire Hathaway Inc. yesterday, dropped $2.35 to $22.15. The company sold stock today at a 9.2 percent discount to yesterday's closing price as it seeks to fund its operations. GE's shares trade at a valuation of less than 10 times trailing earnings, the lowest since Bloomberg began tracking the data in 1990.
Raw-material producers in the S&P 500 sank to the lowest level since 2005, falling 8 percent as a group, after Merrill downgraded fertilizer stocks to ``underperform'' and Mosaic Co., the world's largest maker of phosphates, reported weaker-than- estimated earnings. The group's retreat was the steepest among 10 industries in the S&P 500.
Monsanto, Mosaic
Merrill analysts cut their rating on Monsanto, the world's biggest seed producer, to ``neutral'' from ``buy,'' sending its shares down as much as 21 percent. The stock pared the loss, ending the day at $82.01 with a 16 percent decline, after the company said fiscal 2008 profit was about $3.64 a share, up from a previous estimate of as much as $3.60.
Mosaic tumbled 41 percent to $39.65, its steepest retreat since its shares began trading in 2004. CF Industries Holdings Inc., a maker of nitrogen and phosphate fertilizers, slumped 35 percent to $58, the most since its initial public offering in 2005.
Alcoa slumped 8.9 percent to $19.38 after Goldman Sachs Group Inc. downgraded the largest U.S. aluminum producer to ``neutral'' from ``buy'' on concern metal demand will fall along with the weakening economy.
AK Steel Holding Corp., the No. 3 U.S.-based producer of the metal, fell 17 percent to $20.27.
Transporters Plunge
The Dow Jones Transportation Average lost 8.7 percent for the biggest drop in seven years. Con-way Inc., the second-largest U.S. trucking company, cut its annual profit outlook because of less freight demand and led the decline in the index of railroads, airlines and shippers. Con-way shares fell 20 percent to $34.16.
EBay Inc., the largest Internet auction company, lost 8.2 percent to $19.15. The shares were downgraded to ``equal-weight'' from ``overweight'' at Morgan Stanley, which said ``trends deteriorated more than expected'' in the third quarter.
International Business Machines Corp. had a second day of losses greater than 4 percent. The world's biggest seller of computer services fell $5.39 to $104.74 after Barclays Plc analysts cut third-quarter profit estimates for the company on slowing computer hardware and software sales.
All but two technology stocks in the S&P 500 retreated. The group slipped 4.4 percent.
`Hold My Nose'
The financial-market rescue legislation, which the House likely will act on tomorrow, passed the Senate on a 74-25 vote. It would give the Treasury Department authority to buy assets including mortgage-backed securities that are burdening financial institutions. The Senate added tax provisions to entice Republican votes in the House, where an earlier version of the bill failed on Sept. 29 and sank the Dow average by 777 points.
``If I were a congressman I would hold my nose and vote yes, but people shouldn't be under any illusions about what's going to happen,'' Charles Bobrinskoy, who helps manage about $13 billion as vice chairman of Ariel Investments in Chicago, told Bloomberg Television.
The U.S. Securities and Exchange said it will extend a prohibition on short-sales of financial stocks, keeping restrictions on bets against companies' shares in place while Congress works on the bailout plan. A gauge of 969 stocks on the no-short list lost 4.5 percent.
General Growth Properties Inc. had the biggest decline in the S&P 500. The mall owner slumped for a second day after proxy adviser Glass, Lewis & Co. said the company should have a ban on short selling its stock dropped. The shares fell the most since becoming publicly traded in 1993, losing 48 percent to $7.59.
Oil's $4 Decline
The more than $4 retreat in oil pushed the 40-company S&P 500 energy producers index to a 5.9 percent loss. Oilfield- service providers led the decline after Merrill analysts cut their share forecast for the group and said the credit crunch and investors' aversion to risk may push down demand for oil.
Schlumberger Ltd., the world's largest oilfield contractor, had a decline of as much as 9.2 percent. Weatherford International Ltd., another oilfield-services company, tumbled 21 percent to $18.53. Exxon Mobil Corp., the world's largest oil company, slipped 1.4 percent to $77.50.
Regions Financial Corp., Alabama's biggest bank, rallied 13 percent to $11.85 for the second-biggest advance in the S&P 500. Sanford C. Bernstein & Co. said the lender would be among the biggest beneficiaries of a higher limit on federal deposit insurance.
Sovereign Bancorp Inc., the second-largest U.S. savings and loan, jumped 8.9 percent to $5.25 after Friedman, Billings, Ramsey & Co. boosted the stock's rating to ``market perform'' from ``underperform,'' citing ``relative stability'' in the company's deposit base.
Constellation Energy Group Inc. had the top gain in the S&P 500, adding 15 percent to $27.23. Electricite de France SA, the world's biggest operator of nuclear reactors, is still assessing its options with buyout firm KKR & Co. in relation to Constellation after its takeover approach was rebuffed in favor of an offer from Buffett's MidAmerican Energy Holdings Co.
To contact the reporter on this story: Lynn Thomasson in New York at lthomasson@bloomberg.net.
Read more...
Ford, Interwoven, KVH, Lawson Software: U.S. Equity Preview
By Lu Wang and Whitney Kisling
Oct. 2 (Bloomberg) -- The following companies may have unusual price changes in U.S. trading tomorrow. Stock symbols are in parentheses, and share prices are as of the close of regular trading.
Standard & Poor's 500 Index futures expiring in December lost 44, or 3.8 percent, to 1,124. Dow Jones Industrial Average futures fell 330, or 3 percent, to 10,557. Nasdaq-100 Index futures slipped 68.25, or 4.3 percent, to 1,510.50.
Ford Motor Co. (F US): The second-largest U.S. automaker said results for its Volvo unit will worsen in the second half of this year from the first half, rather than improve as forecast earlier, because of ``deteriorating economic conditions.'' The shares dropped 4.4 percent to $4.35 in regular trading.
Interwoven Inc. (IWOV US): The provider of data-management software said preliminary results showed third-quarter sales reached as much as $66 million, topping its earlier prediction. Analysts surveyed by Bloomberg estimated $64.2 million on average. The shares dropped 6.1 percent to $12.74 in regular trading.
KVH Industries Inc. (KVHI US): The maker of antennas for satellite television said in a statement of preliminary results that third-quarter profit missed its previous forecast because of lower sales. The stock fell 5.9 percent to $8.40 in regular trading.
Lawson Software Inc. (LWSN US): The maker of business- management programs forecast second-quarter revenue that trailed analysts' estimates and said it's evaluating its outlook for the year that ends in May 2009. The stock lost 4.6 percent to $6.41 in regular trading.
Ryder System Inc. (R US): The largest U.S. truck-leasing company agreed to buy all the assets of Transpacific Container Terminal Ltd. and CRSA Logistics Ltd., including operations in Hong Kong and Shanghai, for an undisclosed amount. The stock fell 5.9 percent to $55 in regular trading.
Saia Inc. (SAIA US): The Duluth, Georgia-based trucking company said it cut jobs by 5 percent in field operations and corporate offices because of a decline in shipping demand. The shares dropped 11 percent to $11.68 in regular trading.
To contact the reporter on this story: Lu Wang in New York at lwang8@bloomberg.net; Whitney Kisling in New York at wkisling@bloomberg.net;
Read more...
Oct. 2 (Bloomberg) -- The following companies may have unusual price changes in U.S. trading tomorrow. Stock symbols are in parentheses, and share prices are as of the close of regular trading.
Standard & Poor's 500 Index futures expiring in December lost 44, or 3.8 percent, to 1,124. Dow Jones Industrial Average futures fell 330, or 3 percent, to 10,557. Nasdaq-100 Index futures slipped 68.25, or 4.3 percent, to 1,510.50.
Ford Motor Co. (F US): The second-largest U.S. automaker said results for its Volvo unit will worsen in the second half of this year from the first half, rather than improve as forecast earlier, because of ``deteriorating economic conditions.'' The shares dropped 4.4 percent to $4.35 in regular trading.
Interwoven Inc. (IWOV US): The provider of data-management software said preliminary results showed third-quarter sales reached as much as $66 million, topping its earlier prediction. Analysts surveyed by Bloomberg estimated $64.2 million on average. The shares dropped 6.1 percent to $12.74 in regular trading.
KVH Industries Inc. (KVHI US): The maker of antennas for satellite television said in a statement of preliminary results that third-quarter profit missed its previous forecast because of lower sales. The stock fell 5.9 percent to $8.40 in regular trading.
Lawson Software Inc. (LWSN US): The maker of business- management programs forecast second-quarter revenue that trailed analysts' estimates and said it's evaluating its outlook for the year that ends in May 2009. The stock lost 4.6 percent to $6.41 in regular trading.
Ryder System Inc. (R US): The largest U.S. truck-leasing company agreed to buy all the assets of Transpacific Container Terminal Ltd. and CRSA Logistics Ltd., including operations in Hong Kong and Shanghai, for an undisclosed amount. The stock fell 5.9 percent to $55 in regular trading.
Saia Inc. (SAIA US): The Duluth, Georgia-based trucking company said it cut jobs by 5 percent in field operations and corporate offices because of a decline in shipping demand. The shares dropped 11 percent to $11.68 in regular trading.
To contact the reporter on this story: Lu Wang in New York at lwang8@bloomberg.net; Whitney Kisling in New York at wkisling@bloomberg.net;
Read more...
Thursday, October 2, 2008
Banks Borrow Most in Three Days at Emergency Rate
By Christian Vits
Oct. 2 (Bloomberg) -- Banks borrowed more than 15 billion euros from the European Central Bank at its emergency rate for a third day yesterday, pushing the amount lent over a three-day period to a record.
The ECB's marginal lending rate is 5.25 percent, one percentage point above its benchmark rate for regular auctions. At the same time, banks deposited 48.5 billion euros ($67.5 billion) with the ECB overnight, the central bank said in a statement today. The deposit rate is 3.25 percent
Commercial banks are refusing to lend to each other after the U.S. housing slump caused the collapse of New York-based Lehman Brothers Holdings Inc. and forced governments to bail out banks in the U.S. and Europe. Central banks including the Federal Reserve and the ECB are injecting billions into global money markets in an effort to keep them functioning.
``Trust has completely left the system,'' said Thorsten Polleit, chief German economist at Barclays Capital in Frankfurt. ``I don't see a return to more normal conditions any time soon.''
As some market players are flooded with cash after the ECB's continued liquidity injections, the ECB also offered to drain 200 billion euros from money markets. This is the second drain in two days, after banks' deposits with the ECB jumped to a record 102.8 billion euros on Sept. 30.
More Inventive
The ECB may have to become even more innovative to get banks lending again, say economists at Morgan Stanley and UBS AG. Options include enabling banks to borrow cash for longer timeframes as it did this week when auctioning 120 billion euros for one month or allocating money at a fixed rate rather than letting it be set at elevated levels by market demand.
``The ECB will remain very active in the money market to address the liquidity issue,'' Stephane Deo, chief European economist at UBS AG, said this week.
The ECB today also drained 199 billion euros in overnight funds from money markets at a fixed rate of 4.25 percent. It had previously offered to absorb 200 billion euros. Some 65 banks bid for a total of 216 billion euros.
To contact the reporter on this story: Christian Vits in Frankfurt at cvits@bloomberg.net
Read more...
Oct. 2 (Bloomberg) -- Banks borrowed more than 15 billion euros from the European Central Bank at its emergency rate for a third day yesterday, pushing the amount lent over a three-day period to a record.
The ECB's marginal lending rate is 5.25 percent, one percentage point above its benchmark rate for regular auctions. At the same time, banks deposited 48.5 billion euros ($67.5 billion) with the ECB overnight, the central bank said in a statement today. The deposit rate is 3.25 percent
Commercial banks are refusing to lend to each other after the U.S. housing slump caused the collapse of New York-based Lehman Brothers Holdings Inc. and forced governments to bail out banks in the U.S. and Europe. Central banks including the Federal Reserve and the ECB are injecting billions into global money markets in an effort to keep them functioning.
``Trust has completely left the system,'' said Thorsten Polleit, chief German economist at Barclays Capital in Frankfurt. ``I don't see a return to more normal conditions any time soon.''
As some market players are flooded with cash after the ECB's continued liquidity injections, the ECB also offered to drain 200 billion euros from money markets. This is the second drain in two days, after banks' deposits with the ECB jumped to a record 102.8 billion euros on Sept. 30.
More Inventive
The ECB may have to become even more innovative to get banks lending again, say economists at Morgan Stanley and UBS AG. Options include enabling banks to borrow cash for longer timeframes as it did this week when auctioning 120 billion euros for one month or allocating money at a fixed rate rather than letting it be set at elevated levels by market demand.
``The ECB will remain very active in the money market to address the liquidity issue,'' Stephane Deo, chief European economist at UBS AG, said this week.
The ECB today also drained 199 billion euros in overnight funds from money markets at a fixed rate of 4.25 percent. It had previously offered to absorb 200 billion euros. Some 65 banks bid for a total of 216 billion euros.
To contact the reporter on this story: Christian Vits in Frankfurt at cvits@bloomberg.net
Read more...
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