Daily Forex Market Commentary

Daily Forex Technicals | Written by GFT | Oct 21 08 01:42 GMT |

With the stocks up on Monday and Federal Reserve Chairman Bernanke endorsed an additional fiscal stimulus, the dollar climbed up on Monday. But volume remained lighter than usual. The dollar should attempt to pad its gains today, but the upside is limited. Euro/dollar The euro/dollar fell and closed at the lowest level of the downtrend on Monday. My model remains short as the pair is trying to break out of a triangle. The medium-term outlook remains bearish, but in the short term the downside should be within reach. Immediate support comes from two pivot lows at 1.3289 and 1.3261. Below 1.3190, support remains at 1.3040 Initial resistance moved down to 1.3390. This is followed by 1.3530 and 1.3615. Oscillators are mixed. NEAR-TERM: Mixed to slightly bearish MEDIUM-TERM: Bearish LONG-TERM: Bearish Dollar/yen Dollar/yen struggled higher on Monday and my model remains long. Choppy trading will persists, and the initial bias is still up. The medium-term outlook remains bearish. Resistance remains at 102.30 from a 50-point pivot, which targets 101.80 and 102.80. A pivot high lies at 103.06 Immediate support comes at 101.25 from another 50-point pivot, which targets 100.75 and 101.75. The next level is 100.25 from a 50-point pivot, which targets 99.75 and 100.75. Oscillators are mixed. NEAR-TERM: Slightly bullish MEDIUM-TERM: Bearish LONG-TERM: Mixed Sterling/dollar Sterling/dollar reversed early gains and my model remains short. The downside is favored only slightly, and the medium-term outlook remains bearish. Immediate support is now seen at 1.7105. The next level is 1.6965. Distant support is at 1.6790 Initial resistance is at 1.7230. The next resistance follows at 1.7425. Above 1.7515, distant resistance remains at 1.7630. Oscillators are mixed. NEAR-TERM: Slightly bearish MEDIUM-TERM: Mixed LONG-TERM: Bearish Dollar/Swiss franc Dollar/Swiss powered to a new high for the uptrend and my model went long early Monday. The medium-term risk remains on the upside. Initial resistance remains at 1.1540. The next levels are 1.1573, 1.1650 and 1.1755. Immediate support is now seen at 1.1425. The next level is 1.1325. Below 1.1240, support remains at 1.1055. Oscillators are rising. NEAR-TERM: Slightly bullish MEDIUM-TERM: Bullish LONG-TERM: Bullish Cornelius Luca Global Forex Trading http://www.gftforex.com DISCLAIMER: GFT refers to Global Futures & Forex, Ltd. and all of its divisions, branches and subsidiaries, including Global Forex Trading and GFT Global Markets UK Limited. GFT Global Markets UK Limited is authorized and regulated by the United Kingdom Financial Services Authority. Each investment product is offered only to and from jurisdictions where solicitation and sale are lawful. Trading of foreign exchange contracts, contracts for differences, derivatives and other investment products which are leveraged, can carry a high level of risk, and may not be suitable for all investors. It is possible to lose more than the initial investment. In Australia, GFT means Global Futures & Forex, Ltd. ARBN 103 508 461, AFS Licence 226625. A Product Disclosure Statement (PDS) is available at www.gft.com.au. You should read and consider the PDS before making any decision to deal in GFT products. © 2008 Global Futures & Forex, Ltd. All rights reserved.

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Daily Technical Analysis

Daily Forex Technicals | Written by FX Instructor | Oct 21 08 01:53 GMT |

EURUSD Outlook The EURUSD attempted to push higher yesterday, topped at 1.3530, but failed to maintain the bullish momentum, whipsawed to the downside, bottomed at 1.3287 and closed at 1.3330. My model remains mixed with downside bias. From a longer point of view, the pair is now should testing again the main support at 1.3258 (10/10 2008 low). A break to the downside from that support level could trigger further bearish scenario towards 1.3108 area. CCI in oversold area and heading up towards -100 line suggesting a potential upside correction testing 1.3380 then 1.3435 resistance levels. EURUSD Daily Supports and Resistances: S1= 1.3234 S2= 1.3139 S3= 1.2991 R1= 1.3477 R2= 1.3625 R3= 1.3720 GBPUSD Outlook The GBPUSD failed to maintain it’s bullish momentum yesterday. After break out to the upside from ranging area (1.7350 and 1.7150), the pair topped at 1.7516, the pair quickly fell to the downside, bottomed at 1.7103 and closed at 1.7151. The bullish channel on 4h chart is violated to the downside. My model is mixed with downside bias. Immediate support is seen at 1.7090 followed by 1.6960. CCI in oversold area and heading up suggesting a potential upside correction testing 1.7265 resistance level. GBPUSD Daily Supports and Resistances: S1= 1.6997 S2= 1.6843 S3= 1.6584 R1= 1.7410 R2= 1.7669 R3= 1.7823 USDJPY Outlook The USDJPY was traded softly higher yesterday. The pair topped at 102.41 and closed at 102.10. We still have a bullish channel on hourly and 4h chart. As long as these channel is not violated to the downside, the bias is up. It looks like there are some downside pressures early today in Asian market, testing the trend line (channel) support around 101.60. A violation to the bullish channel should change my model to neutral or even downside bias. Initial resistance at 102.40 followed by 102.80. CCI in neutral area and heading down both on hourly and 4h chart suggesting a potential downside pressures. USDJPY Daily Supports and Resistances: S1= 101.49 S2= 100.88 S3= 100.42 R1= 102.56 R2= 103.02 R3= 103.63 USDCHF Outlook The Swiss Franc slumped against Greenback yesterday. The pair topped at 1.1522 and closed at 1.1505. My model goes long targeting 1.1620. Immediate support is seen at 1.1440 followed by 1.1404. CCI about to cross 100 line up on daily chart suggesting a potential bullish view. USDCHF Daily Supports and Resistances: S1= 1.1377 S2= 1.1249 S3= 1.1177 R1= 1.1577 R2= 1.1649 R3= 1.1777 FX Instructor LLC www.fxinstructor.com The information has been prepared for information purposes only. The document is not intended as personalized investment advice and does not constitute a recommendation to buy, sell or hold investments described herein. This information contained herein is derived from sources we believe to be reliable, but of which we have not independently verified. FXInstructor LLC assumes no responsibilities for errors, inaccuracies or omissions in these materials, nor shall it be liable for damages arising out of any person's reliance upon this information. FXInstructor LLC does not warrant the accuracy or completeness of the information, text, graphics, links or other items contained within these materials. FXInstructor LLC shall not be liable for any indirect, incidental, or consequential damages including without limitation losses, lost revenues or lost profits that may result from these materials. Opinions and estimates constitute our judgment and are subject to change without notice. Past performance is not indicative of future results

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US Stimulus Package Sends Stocks Higher

Daily Forex Fundamentals | Written by Easy Forex | Oct 21 08 01:30 GMT |

U.S. Dollar Trading (USD) was able to make solid gains on the back of a positive reaction to news that the US was thinking of a second stimulus package in response to Bernanke's suggestion. Also helping sentiment was the better than expected at +0.3% in September vs. -0.9% previously. In the U.S. share markets, the NASDAQ was up 58.74 points (3.43%) and the Dow Jones was down 413 points (4.67%). Crude Oil closed up $2.40 ending the New York session at $74.25 per barrel. The Euro (EUR) gained during Asia testing the top of its recent range before pulling back and testing the downside. Support at 1.3380 gave way leading to the day lows as the market focused on the continued friction between European Banks and the German Government. Overall the EUR/USD traded with a low of 1.3290 and a high of 1.3530 before closing the day at 1.3350 in the New York session. The Japanese Yen (JPY) was sold for most of the day against the USD as equities recovered. The selling was tempered by mixed crosses with the EUR/JPY and GBP/JPY being dragged down by their respective majors although the AUD/JPY remained buoyant. Overall the USDJPY traded with a low of 101.37 and a high of 102.42 before closing the day around 102.10 in the New York session. The Sterling (GBP) the GBP rally seen during the Asian session was capped going into Europe by concerning Economic data. Public sector Borrowing blew out to 8.1B from 6.9B expected, the biggest 6 month budget deficit since WW2. Also released, Rightmove House prices showing the largest annual drop in House prices in 6 years. Overall the GDP/USD traded with a low of 1.7107 and a high of 1.7516 before closing the day at 1.7150 in the New York session. The Australian Dollar (AUD) continued to trade in a buoyant nature as it pushed the recovery envelope on high PPI data and soaring stocks. Q3 PPI gained 2% Q/Q vs. 1.0% expected. Large gains in Gold and Oil also helped to support. Overall the AUD/USD traded with a low of 0.6901 and a high of 0.7063 before closing the US session at 0.7030 looking ahead, RBA minutes from the October Meeting along with Governor Stevens Speaking. Gold (XAU) jumped higher on bargain hunting and real money investor demand. Overall trading with a low of USD$783.30 and high of USD$808.20 before ending the New York session at USD$797 an ounce. Easy Forex http://www.easy-forex.com Easy-Forex makes no recommendations as to the merits of any financial product referred to in this website, emails or its related websites and the information contained does not take into account your personal objectives, financial situation and needs. Therefore you should consider whether these products are appropriate in view of your objectives, financial situation and needs as well as considering the risks associated in dealing with those products

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Forex Exchange Morning Report

Daily Forex Fundamentals | Written by Westpac Institutional Bank | Oct 21 08 01:25 GMT |

News And Views The week started on a relatively quiet note, though there were good-size falls in EUR, GBP and CHF vs USD. US equities opened higher and remained there mid-afternoon NY. Broad improvement in risk appetite included a 36bp fall in 3mth USD LIBOR to 4.06%, its lowest fixing since 30 Sep. In testimony to a House committee, Fed chief Bernanke deemed suggestions of further fiscal stimulus to be 'appropriate', without endorsing specific suggestions. NZD/USD recovered from a dip to 0.6119 in London, rallying firmly back to the 0.6240-50 area in NY as the DJIA extended its gains to 240pts. AUD/USD traded a roughly 0.6900 - 0.7040 range in London/NY, suffering amid heavy GBP and EUR selling but back to the higher end of the range in the NY afternoon. EUR/USD had probed above 1.3500 in London but ran out of steam, retreating to the 1.3320 area in NY. Equity gains and lower risk aversion lent less support to USD/JPY than might have been expected, with EUR/JPY selling seen in London. USD/JPY slipped from highs around 102.40 to 101.75. Fed chair Ben Bernanke testimony. Looking very tired and drawn, the Fed chairman patiently dealt with a string of mostly ill-informed and pointless questions from law-makers in the House. His prepared testimony endorsed a further fiscal package to stimulate the economy. US leading index rises 0.3% in Sep, but Aug revised down from -0.5% to -0.9%. The downward revision was due to orders and we suspect the assumption for Sep orders is also not weak enough so Sep will likely be revised down too (orders data not due till next week). Also the money supply component added almost 0.5 ppts to the Sep gain, which is probably a function of the recent financial turmoil and so is another reason to mistrust the apparently strong Sep signal. German PPI accelerates to 8.3% yr in Sep. This surprise rebound from 8.1%yr in Aug was due to pre-announced utility bill increases offsetting the downward impact from crude energy prices. UK public sector finances deteriorating. The Sep public sector net borrowing was £8.1bn, almost double the deficit position a year earlier. Full year borrowing in FY2008/09 will approach £60bn. There will be substantial further borrowing gains as the financial rescue packages hit the numbers. Canadian wholesale sales fall 1.5% in Aug. This was the first fall since Feb, and was driven mainly by a sharp fall in autos. Outlook The 100bp cash rate cut we expect from the RBNZ on Thursday should help limit the scope of any NZD/USD rallies. At the margin, the lack of long NZD longs to be unwound still helps the currency versus AUD during risk aversion surges and vice versa Events Today Country Release Last Forecast NZ Q3 CPI 1.60% 1.70% Jun Food Prices 2.70% – Sep Credit Card Transactions –0.1% – Aus RBA Governor speaks, 1:10pm Oct RBA Board Minutes, 11:30am Sep Motor Vehicle Sales –3.5% flat US Fedspeak: Stern Oct CBI Industrial Trends Survey Can BoC Rate Decision 2.50% 2.25% Westpac Institutional Bank http://www.wib.westpac.co.nz/ Disclaimer All customers please note that this information has been prepared without taking account of your objectives, financial situation or needs. Because of this you should, before acting on this information, consider its appropriateness, having regard to your objectives, financial situation or needs. Australian customers can obtain Westpac's financial services guide by calling +612 9284 8372, visiting www.westpac.com.au or visiting any Westpac Branch. The information may contain material provided directly by third parties, and while such material is published with permission, Westpac accepts no responsibility for the accuracy or completeness of any such material. Except where contrary to law, Westpac intends by this notice to exclude liability for the information. The information is subject to change without notice and Westpac is under no obligation to update the information or correct any inaccuracy which may become apparent at a later date. Westpac Banking Corporation is regulated for the conduct of investment business in the United Kingdom by the Financial Services Authority. © 2004 Westpac Banking Corporation. Past performance is not a reliable indicator of future performance. The forecasts given in this document are predictive in character. Whilst every effort has been taken to ensure that the assumptions on which the forecasts are based are reasonable, the forecasts may be affected by incorrect assumptions or by known or unknown risks and uncertainties. The ultimate outcomes may differ substantially from these forecasts.

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FX Technical Commentary

Daily Forex Technicals | Written by Easy Forex | Oct 21 08 01:35 GMT |

Euro 1.3325 Initial support at 1.3288 (Oct 20 low) followed by 1.3260 (Oct 10 trend low). Initial resistance is now located at 1.3531 (Oct 20 high) at followed by 1.3538 (Oct 9 high). Yen 101.95 Initial support is located at 101.36 (Oct 20 low) followed by 99.27 (Oct 16 trend low). Initial resistance is now at 102.41 (Oct 20 high) followed by 103.07 (Oct 14 high). Pound 1.7140 Initial support at 1.7105 (Oct 20 low) followed by 1.7000 (Key level). Initial resistance is now at 1.7518 (Oct 20 high) followed by 1.7613 (Oct 14 high). Australian Dollar 0.7025 Initial support at 0.6883 (Oct 20 low) followed by the 0.6731 (Oct 16 low). Initial resistance is now at 0.7076 (Oct 20 high) followed by 0.7239 (Oct 14 high) Gold 796 Initial support at 772.05 (Sept 16 low) followed by 764.6 (Sept 15 low). Initial resistance is now at 850 (Oct 16 high) followed by 856.46 (Oct 15 high). Currency Sup 2 Sup 1 Spot Res 1 Res 2 EUR/USD 1.3260 1.3288 1.3325 1.3531 1.3538 USD/JPY 99.27 101.36 101.95 102.41 103.07 GBP/USD 1.7000 1.7105 1.7140 1.7518 1.7631 AUD/USD 0.6731 0.6883 0.7025 0.7076 0.7239 XAU/USD 764.69 772.05 796.00 850.00 856.46 Easy Forex http://www.easy-forex.com Easy-Forex makes no recommendations as to the merits of any financial product referred to in this website, emails or its related websites and the information contained does not take into account your personal objectives, financial situation and needs. Therefore you should consider whether these products are appropriate in view of your objectives, financial situation and needs as well as considering the risks associated in dealing with those products

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Japan Stocks Jump a 3rd Day on Stimulus Plan Hopes; Honda Rises

By Masaki Kondo

Oct. 21 (Bloomberg) -- Japan stocks surged on speculation stimulus plans will jump-start economic growth in the U.S. and at home, and as oil prices rose a third day.

Honda Motor Co., Japan's second-biggest automaker, climbed 5.3 percent. Mizuho Financial Group Inc., the country's No. 2 listed bank, advanced 2.6 percent after a lending rate between banks fell the most in nine months. Mitsubishi Corp., which gets more than half its profit from commodities, jumped 6.1 percent.

``A decline in interbank lending rates eases concern about financial turmoil and boosts investors' appetite for stocks,'' Mamoru Shimode, chief equity strategist at Deutsche Bank AG, said in an interview with Bloomberg Television.

The Nikkei 225 Stock Average climbed 330.21, or 3.7 percent, to 9,335.80 as of 9:26 a.m. in Tokyo, bringing its three-day gain to more than 10 percent. The broader Topix index rose 31.89, or 3.4 percent, to 959.26. All but one of 33 industry groups on the Topix advanced.

Federal Reserve Chairman Ben S. Bernanke yesterday said lawmakers should consider new measures to improve access to credit for consumers and businesses. Tax cuts in a proposed economic stimulus package in Japan may reach 2 trillion yen ($19.7 billion), the Mainichi newspaper said today.

Honda, which gets about half its sales from North America, added 5.3 percent to 2,400 yen, while Panasonic Corp., the world's largest maker of consumer electronics, gained 5.8 percent to 1,727 yen. Canon Inc., which gets a third of its sales from the Americas, rose 5.2 percent to 3,450 yen.

Mizuho gained 2.6 percent to 356,000 yen, and Mitsubishi UFJ Financial Group Inc., Japan's largest listed bank, climbed 3.9 percent to 831 yen. Orix Corp., the nation's biggest non-bank financial company, jumped 6.5 percent to 13,010 yen.

Libor, Oil

The London interbank offered rate, or Libor, which banks charge each other for three-month loans in dollars, fell by 36 basis points to 4.06 percent, according to the British Bankers' Association, the biggest decline in nine months. That suggests efforts by central banks to unfreeze credit markets are starting to take effect.

Mitsubishi, Japan's largest trading house, rose 6.1 percent to 1,847 yen, as smaller rival Mitsui & Co. added 6.3 percent to 1,062 yen. Inpex Corp., Japan's largest oil and gas explorer, wasn't traded as orders to buy outnumbered those to sell.

Crude oil for November delivery extended its gain to a third day today, after rising 3.3 percent to $74.25 a barrel on the New York Mercantile Exchange yesterday. A $1 change in the price of a barrel of oil alters Mitsubishi's annual net income by 1 billion yen ($9.8 million), according to Mitsubishi UFJ Securities Co.

Nikkei futures expiring in December rose 2.6 percent to 9,330 in Osaka and gained 3 percent to 9,335 in Singapore.

To contact the reporter for this story: Masaki Kondo in Tokyo at mkondo3@bloomberg.net.

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Asian Stocks Advance, Led by Banks; Woodside Climbs on Oil

By Patrick Rial

Oct. 21 (Bloomberg) -- Asian stocks climbed, led by financial companies and commodity producers, on optimism the U.S. and Japan will expand efforts to stimulate the economy.

Mitsubishi UFJ Financial Group Inc. rose 4 percent after Federal Reserve Chairman Ben S. Bernanke endorsed additional fiscal stimulus and newspapers reported Japan may cut taxes by almost $20 billion. Woodside Petroleum Ltd., Australia's second- largest oil producer, jumped 7.1 percent after oil advanced.

The MSCI Asia Pacific Index gained 2.3 percent to 92.71 as of 9:37 a.m. in Tokyo, rising for a third day, its longest winning streak since July 24.

Japan's Nikkei 225 Stock Average added 3.8 percent to 9,350.63. All other benchmark indexes in the region advanced.

U.S. stocks jumped yesterday, with the Standard & Poor's 500 Index rising 4.8 percent to 985.40.

To contact the reporter for this story: Patrick Rial in Tokyo at prial@bloomberg.net.



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Japan Banks' Willingness to Lend Holds at 8-Year Low

By Toru Fujioka

Oct. 21 (Bloomberg) -- Japan's banks willingness to lend to small and midsized companies stayed at the lowest level in at least eight years as lenders hoard funds on signs the world's second-largest economy is in a recession.

An index of willingness to lend money to smaller companies was at 5 this month, unchanged from July, the Bank of Japan said in a quarterly survey of loan officers in Tokyo today. The bank started the survey in April 2000.

Business failures rose at the fastest pace in eight years in September, led by construction and real-estate companies that struggled to obtain funding. Policy makers are considering reviving a law that would allow them to pump public funds into ailing regional lenders, which are a source of funding for small and midsized companies.

``Banks are reluctant to lend because of the worsening economy,'' said Yoshimasa Maruyama, a senior economist at BNP Paribas Securities Japan Ltd. in Tokyo. ``The government wants to make sure banks aren't scared because if they are, they will stop lending and that will worsen the economy further.''

Small and midsized companies employ 70 percent of the nation's workforce.

The government yesterday acknowledged that it has probably entered its first recession in six years. It downgraded six components of the evaluation including exports, industrial production and consumer spending, the most in a decade.

Stifling Growth

Bank of Japan Governor Masaaki Shirakawa yesterday said rising bankruptcies are making it more costly for some companies to borrow, stifling growth in the world's second-largest economy. Banks' appetite to lend to large companies fell to minus 2 from minus 1, a record low, today's report showed.

``The livelihood of companies depends on funding,'' said Yasuhide Yajima, a senior economist at NLI Research Institute in Tokyo. ``The depth and duration of Japan's recession will depend on whether companies have enough money to keep themselves running.''

Fuji Biomedix Co., a Japanese tester of medicines for drugmakers, was forced out of business last week after failing to obtain funding from its lenders. Corporate bankruptcies rose 34 percent last month, the biggest jump since March 2000.

To contact the reporter on this story: Toru Fujioka in Tokyo at tfujioka1@bloomberg.net



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N.Z. Power Prices Jump on Cold Weather, Line Work

By Gavin Evans

Oct. 21 (Bloomberg) -- New Zealand power prices jumped after a cold snap increased demand at a time when supplies were reduced by maintenance on electricity transmission cables linking the country's North and South Islands.

Power in Auckland, the biggest city and home to Contact Energy Ltd.'s Otahuhu generator, jumped to NZ$1,041 ($648) a megawatt-hour at 8 a.m. local time, from NZ$43 the same time yesterday. It cost NZ$54 at 12 p.m.

The power link that usually brings energy to the North Island from dams on the South Island is shut for four days of maintenance. Cold weather also increased demand at a time when Genesis Power Ltd. idled half of its 1,000-megawatt coal-fired Huntly power station during what is typically a period of relatively low electricity use.

``Demand was up higher than forecast this morning'' and the Huntly units take a day to start from cold, Genesis spokesman Richard Gordon said. Output from the company's dams and a 48- megawatt gas unit were increased to help meet the demand peak, he said.

New Zealand households are supplied under fixed-price tariffs that shield them from fluctuations in the wholesale power market. Heavy industry, including the nation's paper makers and smelter operators, buy much of their energy at wholesale prices.

Temperatures in Auckland, Northland and through the central North Island were cooler than usual this morning, according to government-owned forecaster Metservice Ltd.

Power demand was more than forecast today, though not substantially so, said Rebecca Wilson, spokeswoman for grid operator Transpower New Zealand Ltd. Generators are being regularly alerted to reserve needs in the market and have capacity to offer more power if they choose to, she said.

While the industry has a market for emergency, instantaneous reserve, it lacks a mechanism to pay thermal generators for keeping units ``warm'' and on standby to meet swings in demand, Genesis Power's Gordon said.

Power at Benmore on the South Island cost NZ$105 a megawatt- hour at 12 p.m. from NZ$75 the same time yesterday.

To contact the reporter on this story: Gavin Evans in Wellington at gavinevans@bloomberg.net.

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RBA Saw `Strong Economic Case' for Australia Rate Cut

By Jacob Greber

Oct. 21 (Bloomberg) -- Increased risks to Australia's economy and signs that inflation will cool gave the central bank a ``strong economic case'' for this month's 1 percentage point interest-rate cut, the biggest since a recession in 1992.

``The material change to the balance of risks surrounding the outlook for growth and inflation in Australia meant that a significantly less-restrictive stance of monetary policy was now appropriate,'' members of the Reserve Bank's board said in minutes of their Oct. 7 meeting, released in Sydney today.

Concern about fallout from the deepening global credit freeze also outweighed the threat that a larger-than-expected rate reduction would erode market confidence already battered by tumbling equities, the minutes showed. Governor Glenn Stevens and his board reduced the benchmark rate to 6 percent as even ``creditworthy borrowers'' were being blocked.

The board considered the possibility that the rate cut ``could have a negative effect on market sentiment,'' the minutes said. ``Members concluded that despite the possibility of a short-term reaction, stronger action would help sentiment over time.''

Australia's dollar pared gains to 70.11 U.S. cents, from 70.18 cents before the report was released at 11:30 a.m. in Sydney. It closed at 70.03 cents late in Asia yesterday.

This month's reduction in the overnight cash rate was twice as much as economists forecast, and took borrowing costs to the lowest since November 2006.

``Members observed that an easing of 100 basis points would bring forward some of the easing markets had already priced in for following months,'' the minutes said. ``The increased downside risks to growth and the improved prospects for lower inflation meant that there was a strong economic case to do so.''

Economy Cooling

Policy makers also signaled in the minutes that they ``did not regard this unusually large adjustment as establishing a pattern for future monetary policy decisions.''

Australia's economy, now in its 17th year of expansion, is cooling as consumers cut spending and banks reduce lending to home-buyers and businesses.

Gross domestic product grew 0.3 percent in the three months through June, the slowest quarterly expansion since the end of 2004, as consumer spending contracted for the first time since 1993.

Unemployment rose to 4.3 percent last month from 4.1 percent in August. Credit provided by banks and financial institutions to home buyers rose 0.4 percent in August, the smallest monthly increase in 22 years, and house-building approvals fell for a second month.

Lehman Collapse

``The path of economic activity had to date evolved in line with the board's previous expectations, with the needed moderation in demand occurring,'' to slow inflation that surged to 4.5 percent in the second quarter. Policy makers aim to keep the rate between 2 percent and 3 percent on average.

``However, the latest economic data predated the onset of the current bout of financial market turmoil,'' the minutes said.

The collapse of Lehman Brothers Holdings Inc. was the catalyst for the ``markedly undermined trust'' among banks around the world. That drove up the cost of inter-bank lending and ``greatly added to banks' funding difficulties,'' the minutes said.

Stevens said on Oct. 7 that ``an unusually large movement in the cash rate was appropriate in order to bring about a significant reduction in costs to borrowers.''

There are signs that some of those costs are starting to ease after the Australian government's decision to guarantee bank deposits last week.

Commonwealth Bank of Australia, the nation's biggest provider of mortgages, cut the price of its variable interest rate home loans yesterday by 21 basis points, to 8.32 percent, following similar moves by National Australia Bank Ltd. and Australia & New Zealand Banking Group Ltd.

All three lenders, as well as Westpac Banking Corp., cut their standard variable home loan rates by 80 basis points in the days following this month's decision by the Reserve Bank.

To contact the reporter for this story: Jacob Greber in Sydney at jgreber@bloomberg.net



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Buyout, Hedge Funds Will Be Next Dominos to Drop: Matthew Lynn

Commentary by Matthew Lynn

Oct. 21 (Bloomberg) -- If Sherlock Holmes were analyzing the credit crunch, he would be drawing our attention to the dog that didn't bark, just as he did in ``The Hound of the Baskervilles.''

The dog, of course, would be hedge and private-equity funds.

Anyone tracking markets in recent years will remember the prediction that the unregulated, feverish trading of hedge funds, and the massive debts and complex financial engineering of buyout firms, would cause the next crash.

The crash happened, but it was started by what appeared to be safer institutions. It was the relatively dull mortgage lenders, and the investment banks that supplied their funding through the wholesale money markets, that sparked the collapse.

The dog didn't bark. That doesn't mean it won't. The hedge and private-equity funds will be the next dominos to fall. The process may already have started. And just as the last few months have been dominated by the bailout of banks, we will soon hear more about the sinking of alternative asset managers.

``We are going to see a lot of consolidation, and a lot of funds are going to close down,'' says Jacob Schmidt, chief executive officer of London-based hedge-fund advisory firm Schmidt Research Partners. ``We are going to see a real reduction in the number of offerings out there -- and some of the good guys are going to suffer along with the me-toos and copycats.''

The funds have so far avoided the worst of the crunch. There is a simple reason: They were more conservatively managed than many people gave them credit for. They took fewer risks than the investment banks, largely because they have their own money tied up in the businesses they are running. They weren't just making big bets in pursuit of this year's bonus.

Job Losses

Now the pain is starting to spread.

The hedge-fund industry lost $79 billion through asset-price declines and investor withdrawals during September, according to the Singapore-based research and publishing company Eurekahedge Pte. The executive search firm Options Group estimates that there may be as many as 10,000 job losses in the industry this year.

The share prices also suggest a bleak future. Man Group Plc, the world's largest publicly traded hedge fund, has dropped to 352 pence from 600 pence in July. RAB Capital Plc, another star of the industry, has slumped to 13 pence from 126 pence last year. It's hard to see anything positive in that.

At the same time, the outlook for buyout funds is turning scary. Candover Investments Plc, a U.K. private-equity firm, said last week the looming economic slowdown was likely to hurt the value of its investments. Meanwhile, the debt that buyout funds use for financing is dropping in price as investors shun any kind of asset that looks risky.

No Credit

Hedge funds will suffer because they won't be able to leverage investments anymore. The credit won't be available.

They will face more restrictions as part of the regulatory backlash that will be the inevitable consequence of the market turmoil over the last month. That is going to limit returns and room for maneuver, making the funds less attractive to investors.

And central banks will be so chastened by the last few months, they are unlikely to allow any bubbles to build up for a long time -- and hedge funds were good at chasing asset bubbles.

Buyout funds, likewise, relied on debt markets to finance acquisitions. Investors' appetite for the intricate financial engineering employed has vanished. Without leverage, it will be hard to make the business work. The debt markets were what buyout funds used to make their investments and then to sell them a few years later. They were the entry and exit strategies. With those doors closed, there won't be much left to do.

Sour Deals

Worse, as Candover has pointed out, a world economic decline will damage the industries that buyout funds bought into, such as retailing and food manufacturing. They won't be able to make new deals, and the old ones are about to turn sour. It isn't a happy combination.

Both types of funds boomed in an era of turbocharged innovation. They were satellites to the investment-banking economy that has now collapsed. We are entering a period during which financial markets will be very restrained. There won't be much space for financial buccaneers, precisely what the hedge and private-equity funds had become.

They will struggle, and the dog is barking.

(Matthew Lynn is a Bloomberg News columnist. The opinions expressed are his own.)

To contact the writer of this column: Matthew Lynn in London at matthewlynn@bloomberg.net.

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N.Z. Inflation Rate Accelerates to 18-Year-High 5.1%

By Tracy Withers

Oct. 21 (Bloomberg) -- New Zealand's annual inflation rate accelerated to the fastest pace in more than 18 years in September, fanned by fuel and food costs that have hastened the nation's slide into a recession.

The consumer prices index rose 5.1 percent in the year ended Sept. 30, the most since 1990, Statistics New Zealand said in Wellington today. The result matched the median estimate of 14 economists surveyed by Bloomberg. From the second quarter, prices rose 1.5 percent.

Financial market turmoil may push the global economy into recession next year, the International Monetary Fund said this month. Reserve Bank of New Zealand Governor Alan Bollard last month forecast annual inflation will slow over the next two years and he has started to cut interest rates to kick-start spending and investment.

``We should see inflation moderate, but it's coming from a higher level than the Reserve Bank thought,'' said Su-Lin Ong, senior economist at RBC Capital Markets Ltd. in Sydney. ``It won't stop them cutting interest rates, but it might have some bearing on the pace and how quickly they get to neutral.''

The New Zealand dollar bought 62.02 U.S. cents at 11:25 a.m. in Wellington from 62.07 cents immediately before the report.

Bollard, who is required to keep inflation between 1 percent and 3 percent, said on Sept. 11 that slowing growth will return inflation to his target range by early 2010. He expected prices rose 4.9 percent in the year through September.

Economic Recession.

Bollard has cut the benchmark interest rate by three quarters of a point to 7.5 percent since July.

He will probably cut the rate by one point to 6.5 percent on Oct. 23, according to 10 of 14 economists surveyed by Bloomberg News last week. Ong is one of four economists expecting a cut to 6.75 percent.

The economy contracted 0.2 percent in the second quarter after shrinking 0.3 percent in the first three months of the year. Bollard last month forecast a further decline in spending in the third quarter and companies surveyed by the New Zealand Institute of Economic Research Inc. also expect a drop in sales in the final three months.

Growth in 2008 will probably slow to 0.5 percent from 3 percent in 2007, the Treasury Department said this month.

Consumer confidence is falling and the housing market is contracting. House prices dropped 6.1 percent in September from a year earlier. House sales are close to a 16-year low, according to Real Estate Institute figures.

Non-Tradable Prices

Bollard's primary focus is on non-tradable inflation, a core measure of prices that are not influenced by currency fluctuations and fuel, say economists.

Non-tradable prices rose 1.3 percent from the second quarter, the fastest pace in almost five years. The measure gained 4.1 percent from a year earlier after rising 3.4 percent in the year to June.

Fuel and food prices, plus the local authority land taxes, made the biggest contributions to third-quarter inflation.

Gasoline prices rose 4.6 percent in the quarter and 29 percent from a year earlier. Excluding gasoline, consumer prices gained 1.3 percent in the quarter and 3.7 percent over the year, the agency said.

Food prices jumped 3.7 percent, led by fresh vegetables and fruit as wet weather crimped production. Excluding food, consumer prices gained 0.8 percent in the quarter.

A 4.7 percent increase in local land taxes pushed up the cost of owning a home. Rents and electricity prices also increased. The cost of buying and building a new house gained 1.3 percent.

The price of overseas packaged holidays jumped 13 percent. Air travel and vehicle licensing costs also increased. The prices of used cars, telephones, clothing and computers fell.

To contact the reporter on this story: Tracy Withers in Wellington at twithers@bloomberg.net.

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Euro May Slide to $1.26 as Interest Rates Ease, Citigroup Says

By Candice Zachariahs

Oct. 21 (Bloomberg) -- Investors should sell the euro versus the dollar because the European Central Bank is likely to cut its benchmark rate toward 2.5 percent as oil prices fall and growth slows, Citigroup Global Markets Inc. said.

``We believe that there is potentially a perfect storm building against the euro,'' wrote Tom Fitzpatrick, New York- based global currency head of strategy at Citigroup Global Markets, in a research note yesterday. The currency may fall to ``at least $1.28 by year-end and maybe even continue lower in 2009.''

Citigroup recommends investors sell the currency at $1.3314 per euro, with a ``minimum target'' of between $1.26 and 1.28. Investors should exit the bet if the euro strengthens to $1.3476, wrote Fitzpatrick. The euro traded at $1.3331 at 7:07 a.m. in Tokyo from 1.3344 yesterday. It reached a 19-month low of $1.3259 on Oct. 10.

The ECB's target rate of 3.75 percent is ``way too tight in Europe even under a misguided single mandate,'' Fitzpatrick wrote in a separate note dated Oct. 17. The benchmark rate is 1.5 percent in the U.S. and 0.5 percent in Japan.

To contact the reporter on this story: Candice Zachariahs in Sydney at czachariahs2@bloomberg.net

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Korean Won Falls First Time in 3 Days; Foreign Stock Sales Seen

By Judy Chen

Oct. 21 (Bloomberg) -- South Korea's won fell for the first time in three days on speculation that foreign investors will cut holdings of local equities as the economy slows.

The currency extended its loss this year to 29 percent, the worst performer among the 10 most-active currencies in Asia outside of Japan. South Korea's economic growth is likely to fall short of 4 percent in the second half of this year and the first half of 2009, Central Bank Governor Lee Seong Tae said today.

``The government's action aims to promote stability, but foreigners' selling of local shares will put pressure on the won,'' said Ko Yun Jin, a currency dealer at Kookmin Bank in Seoul, the country's largest lender.

The won dropped 0.4 percent to 1,319.75 per dollar at 9:37 a.m. in Seoul, according to Seoul Money Brokerage Services Ltd. The currency lost 15 percent in the past month.

Asia's fourth-largest economy is facing the ``most difficult time'' since the 1997-1998 Asian financial crisis and the central bank will adjust rates according to conditions, Lee told lawmakers during an annual parliamentary testimony in Seoul.

To contact the reporters on this story: Judy Chen in Shanghai at xchen45@bloomberg.net

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Australian, New Zealand Dollars Gain as Risk Appetite Improves

By Candice Zachariahs

Oct. 21 (Bloomberg) -- The Australian and New Zealand dollars rose for a third day after U.S. stocks gained, prompting investors to buy higher-yielding assets.

The currencies advanced against the yen and the U.S. dollar as prices increased for commodities exported by the nations and a gauge that measures risk aversion dropped from a record to the lowest in almost two weeks.

``We've got a much better stock market, so for the Aussie that's a clear improvement in risk conditions,'' said Tony Morriss, a senior currency strategist at Australia & New Zealand Banking Group in Sydney, referring to the currency by its nickname. ``The Aussie was heavily oversold as a reaction to intense risk aversion and downgrades to local growth, and now we're starting to see a reversal.''

The Australian dollar rose 0.6 percent to 70.46 U.S. cents as of 8:20 a.m. in Sydney, from 70.03 cents late in Asian trading yesterday. New Zealand's dollar gained 0.8 percent to 62.22 cents from 61.73 cents.

Australia's dollar gained 0.5 percent to 71.81 yen, from 71.46 yesterday. New Zealand's currency rose to 63.41 yen from 62.98 yesterday.

The currencies advanced as the VIX volatility index, a gauge reflecting expectations for stock-market price changes and risk appetite, fell to 52.97 yesterday from a record 70.33 on Oct. 17. U.S. stocks rose, after Halliburton Co., the world's second-largest oilfield-services provider, announced profits that topped estimates and Federal Reserve Chairman Ben S. Bernanke endorsed an additional economic stimulus package.

The Australian and New Zealand dollars were higher as the UBS Bloomberg Constant Maturity Commodity index of 26 raw materials gained for a second day. Raw materials make up 60 percent of Australia's exports and 70 percent of New Zealand's.

The Reserve Bank of Australia will release the minutes from its Oct. 7 board meeting today and Governor Glenn Stevens will speak later in the day in Sydney. The bank cut its benchmark rate 1 percentage point to 6 percent at that meeting, the biggest reduction since the 1992 recession.

To contact the reporter on this story: Candice Zachariahs in Sydney at czachariahs2@bloomberg.net



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Dollar Gains Against Euro as Bernanke Endorses Extra Stimulus

By Stanley White and Ye Xie

Oct. 21 (Bloomberg) -- The dollar rose for a fifth day against the euro after Federal Reserve Chairman Ben S. Bernanke endorsed additional fiscal stimulus to support the U.S. economy.

The greenback also gained for a third day versus the British pound after the White House said it's open to the idea of a new plan, fueling speculation policy makers will help the world's largest economy recover from a recession before the rest of the world. The yen may decline as a rally in global stocks encourages purchases of higher-yielding assets funded in the Japanese currency.

``An additional stimulus package will support the dollar,'' said Tsutomu Soma, a bond and currency dealer at Okasan Securities Co. in Tokyo. ``This shows that U.S. officials are prepared to go far to limit damage to the economy.''

The dollar rose to $1.3319 per euro as of 8:26 a.m. in Tokyo from $1.3344 late yesterday in New York. It touched $1.3259 on Oct. 10, the strongest since March 2007. Against the pound, the dollar gained to $1.7138 from $1.7152. The U.S. currency was little changed at 101.93 yen. The yen traded at 135.77 per euro from 135.92. The dollar may rise to $1.3285 today, Soma said.

Lawmakers ``should consider including measures to help improve access to credit by consumers, homebuyers, businesses and other borrowers,'' Bernanke said in testimony to the House Budget Committee yesterday. ``Such actions might be particularly effective at promoting economic growth and job creation,'' he told lawmakers.

Within an hour of the conclusion of Bernanke's testimony, White House Press Secretary Dana Perino said officials would ``look carefully'' at the suggestions.

Dollar's Rally

The dollar has gained 20 percent since touching a record low of $1.6038 per euro on July 15 on speculation the greenback will benefit as the European economy slows.

Traders expect the European Central Bank to lower borrowing costs further after cutting the main refinancing rate by half a percentage point to 3.75 percent on Oct. 8 as part of coordinated reductions by major central banks. The implied yield on the three-month Euribor contract expiring in March fell to 3.41 percent yesterday, the lowest level in seven months. The yield has been 0.23 percentage point higher than the benchmark rate on average over the past year.

The Fed will lower its 1.5 percent target lending rate by at least a quarter-percentage point when the central bank announces its next policy decision on Oct. 29, interest-rate futures indicated.

`More Room'

``The ECB has much more room to lower rates,'' said Brian Kim, a currency strategist at UBS AG in Stamford, Connecticut. ``The Fed is ahead and proactive in easing rates. The rate expectations will kick into play, and the dollar should get supported.''

Investors see smaller price swings in major currencies on speculation credit market may be thawing after governments bailed out financial institutions and injected cash into the banking system.

Volatility on major currencies declined to 15.58 percent yesterday, from 16.97 percent on Oct. 17, according to a JPMorgan Chase & Co. index. The gauge touched 20.9 percent on Oct. 10, the highest since its inception in 1992.

``There's more hope that volatility will drift lower,'' said Alan Ruskin, head of international currency strategy in North America at RBS Greenwich Capital Markets Inc. in Greenwich, Connecticut. ``People are still gun-shy.''

The London interbank offered rate, or Libor, that banks charge each other for three-month loans in dollars slid 36 basis points, or 0.36 percentage point, to 4.06 percent yesterday, the biggest drop in nine months, according to the British Bankers' Association.

To contact the reporters on this story: Stanley White in Tokyo at swhite28@bloomberg.net; Ye Xie in New York at yxie6@bloomberg.net.

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Asia Commodities Day Ahead: U.S. Fights JBS, National Beef Deal

Oct. 21 (Bloomberg) -- U.S. antitrust enforcers and 13 states sued to prevent Brazil's JBS SA from acquiring National Beef Packing Co. Copper fell; gold, silver and platinum rose. Mosaic Co. rose 16 percent in New York on speculation Cargill Inc. may take advantage of a plunge in the crop-nutrient maker's shares to increase its majority stake. Corn and soybeans gained; wheat declined.

AGRICULTURAL COMMODITIES

U.S. Sues to Block JBS From Acquiring National Beef

U.S. antitrust enforcers and 13 states sued to prevent Brazil's JBS SA from acquiring National Beef Packing Co., saying the company would have too much control over the $30 billion cattle market and retail meat prices.

Hormel Foods Tumbles After Reducing 2008 Profit Forecast

Hormel Foods Corp., the maker of Spam meat spread, fell the most in eight years in New York trading after saying 2008 profit will be less than expected because of higher costs and a decline in its investments.

Mosaic Rises Amid Speculation Cargill May Boost Stake

Mosaic Co. rose 16 percent in New York on speculation Cargill Inc. may take advantage of a plunge in the crop- nutrient maker's shares this year to increase its majority stake.

Corn, Soybean Prices Climb as Bank Rescue May Revive Demand

Corn and soybeans rose, after last week touching the lowest prices of the year, on speculation that financial rescues in the U.S. and Europe will prevent a global recession. Corn gained 15.5 cents, or 3.8 percent, to $4.185 a bushel in Chicago. Soybeans climbed 34 cents, or 3.7 percent, to $9.4075 a bushel.

Wheat Futures Fall on Signs of Slack Demand for U.S. Stockpiles

Wheat fell for the fourth time in five sessions on signs that the lowest prices in 16 months have done little to revive demand for supplies from the U.S., the world's largest exporter. Wheat dropped 2.75 cents, or 0.5 percent, to $5.635 a bushel in Chicago.

Cattle Futures Fall as Feedlots Buy Heavier Animals; Hogs Drop

Cattle futures fell on signs that the supply to U.S. slaughterhouses will increase after feedlot operators bought more animals at heavier weights. Cattle slipped 0.475 cent, or 0.5 percent, to 92.075 cents a pound in Chicago. Feeder cattle dropped 0.1 cent to 97.95 cents a pound. Hogs declined 0.05 cent to 56.25 cents a pound.

CHEMICALS

DuPont Profit to Drop on Hurricanes, Slowing Economy

DuPont Co., the third-biggest U.S. chemical maker, may report its first decline in profit in 10 quarters after global demand for housing and auto products slumped and hurricanes disrupted operations.

INDUSTRIAL METALS, MINING

Freeport May Post Biggest Profit Decline Since 2007

Freeport-McMoRan Copper & Gold Inc., the world's largest publicly traded copper producer, probably will say Oct. 21 that third-quarter profit tumbled 43 percent, the biggest drop in almost a year, as metal prices declined.

Copper Price Falls in New York as China's Economic Growth Slows

Copper prices dropped after China's economy, the biggest contributor to global growth, expanded at the slowest pace in five years. Copper fell 6.3 cents, or 2.9 percent, to $2.1165 a pound in New York.

PRECIOUS METALS, GEMS

Gold Rebounds as Decline Below $800 Spurs Buyers; Silver Gains

Gold rose after the lowest price in more than a month attracted investors and spurred jewelry demand. Gold gained $2.30, or 0.3 percent, to $790 an ounce in New York. Silver climbed 35.5 cents, or 3.8 percent, to $9.69 an ounce.

Platinum, Palladium Prices Gain in N.Y. on Rate-Cut Speculation

Platinum and palladium climbed in New York on speculation that the Federal Reserve may cut U.S. interest rates to boost economic growth, supporting demand for the metals used in car parts and jewelry. Platinum rose $11.50, or 1.3 percent, to $892.50 an ounce in New York. Palladium jumped $5.55, or 3.2 percent, to $180.05 an ounce.

SOFT COMMODITIES

Cotton Plunges Most in 13 Years on Dollar's Gain, Slack Demand

Cotton prices plunged the most in at least 13 years as the dollar's rally made U.S. supplies less attractive to overseas buyers and purchases by merchants slowed. Cotton tumbled 3.51 cents to 49.06 cents a pound in New York.

Sugar, Cocoa Prices Drop in N.Y. as Dollar Rally Erodes Demand

Sugar prices fell in New York as the dollar's rally eroded the appeal of some commodities. Raw sugar lost 0.08 cent, or 0.7 percent, to 11.5 cents a pound. Cocoa dropped $37, or 1.7 percent, to $2,085 a metric ton.

Coffee Slips in N.Y. as Higher Dollar Trims Commodities Demand

Coffee slipped in New York as the dollar gained, reducing demand for commodities priced in the U.S. currency. Arabica coffee fell 1.1 cents, or 1 percent, to $1.145 a pound. In London, robusta coffee fell $3, or 0.2 percent, to $1,791 a pound. Orange juice for November delivery jumped 1.9 cents, or 2.3 percent, to 85.45 cents a pound in New York. Orange juice futures for January delivery rose 2 cents, or 2.3 percent, to 88.9 cents a pound.



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Crude Oil Rises a Third Day on Signs OPEC Will Reduce Output

By Mark Shenk and Samantha Zee

Oct. 21 (Bloomberg) -- Crude oil rose for a third day on signs that the Organization of Petroleum Exporting Countries will reduce production to halt a 50 percent drop in prices since July.

OPEC may decide to pare production by 1 million to 2 million barrels a day in stages at an Oct. 24 meeting to stabilize prices, said Chakib Khelil, the group's president. Deutsche Bank AG cut its 2009 crude-oil price estimate by 35 percent to $60 a barrel, citing the possibility of a ``major world recession.''

``The main reason for the rise is the impending OPEC production cut,'' said Nauman Barakat, senior vice president of global energy futures at Macquarie Futures USA Inc. in New York. ``It's not a question of if, but of how much they will cut production at Friday's meeting.''

Crude oil for November delivery rose $1.44, or 1.9 percent, to $75.69 a barrel at 9:38 a.m. Sydney time on the New York Mercantile Exchange. Yesterday, oil rose $2.40 to settle at $74.25 a barrel.

``Oil is following the equity markets higher,'' Barakat said. ``The fate of energy markets has been very closely tied to the Dow Jones Industrial Average lately.''

U.S. stocks rose yesterday, adding to the Dow Jones Industrial Average's best weekly gain in five years, after Halliburton Co.'s profit topped estimates and Federal Reserve Chairman Ben S. Bernanke endorsed an economic stimulus package.

Emergency Meeting

OPEC, supplier of about 40 percent of the world's oil, brought forward to this week a Vienna meeting planned for November to discuss output levels.

``OPEC is the focus,'' said Michael Fitzpatrick, vice president for energy risk management at MF Global Ltd. in New York. ``We are all waiting to see what OPEC does on Friday. A 1 or 1.5 million-barrel cut looks most likely, but as much as 3 million barrels is a possibility, although done in stages.''

While there's a consensus among the group's members to cut output, there's no agreement on the size of the reduction, Khelil, who is also Algeria's oil minister, said in an interview on Algerian television yesterday.

``There should be more than 1 million,'' Shokri Ghanem, chairman of Libya's National Oil Corp., said in a telephone interview yesterday. ``I can't say how much, we will leave it to discussion.''

Qatari Oil Minister Abdullah bin Hamad al-Attiyah told Al Jazeera TV the cut will probably be 1 million barrels a day. Saudi Arabia, which dominates OPEC proceedings as the group's largest producer, has yet to comment on its intentions.

Goldman Outlook

Goldman Sachs Group Inc. and Merrill Lynch & Co. said a 1 million-barrel cut is possible. Oil may fall below $60 a barrel if OPEC limits the cut to 1 million barrels a day, Goldman analysts said in a report dated Oct. 17. Merrill analysts said OPEC may trim supplies by 2.4 million barrels a day over 12 months if economic conditions deteriorate.

OPEC's 13 members produced 32.2 million barrels a day in September, according to a Bloomberg News survey of analysts and producers.

``The West is going to be angry because the drop in oil prices has been just about the only positive economic news,'' Fitzpatrick said. ``Falling gasoline prices have been a great help to consumers.''

Regular gasoline, averaged nationwide, declined 3.1 cents to $2.923 a gallon, AAA, the nation's largest motorist organization, said yesterday on its Web site. Pump prices have tumbled 29 percent from the record $4.114 a gallon reached on July 17.

To contact the reporter on this story: Mark Shenk in New York at mshenk1@bloomberg.net; Samantha Zee in Los Angeles at szee@bloomberg.net.

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Australia Stocks: Babcock, James Hardie, Rio, Santos, Westfield

By Ian C. Sayson and Malcolm Scott

Oct. 21 (Bloomberg) -- The S&P/ASX 200 Index gained 66.60 points, or 1.6 percent, to 4,208.90 as of 10:24 a.m. in Sydney. The broader All Ordinaries Index added 70.70, or 1.7 percent, to 4,169.40, while the S&P/ASX 200 Index futures contract due in December rose 2.5 percent to 4,260.

The following is a list of companies whose shares were among the most active in Australian trading. Stocks symbols are in parentheses after company names.

U.S.-Related Stocks: Westfield Group (WDC AU), the world's biggest shopping mall owner by market value, added 61 cents, or 3.6 percent, to A$17.64, heading for its highest close since Oct. 3. James Hardie Industries NV (JHX AU), the biggest seller of home siding in the U.S., climbed for the third day, adding 2 cents, or 0.4 percent, to A$4.80.

U.S. benchmark indexes gained after the Conference Board's index of leading economic indicators unexpectedly rose in September and Federal Reserve Chairman Ben S. Bernanke said lawmakers should consider new measures to improve access to credit for consumers, homebuyers and businesses.

Oil companies: Woodside Petroleum Ltd. (WPL AU), operator of Australia's A$25 billion ($20 billion) North West Shelf liquefied natural gas venture, advanced A$2.13, or 5.6 percent, to A$40.44. Santos Ltd. (STO AU), Australia's third-biggest oil and gas producer, climbed 72 cents, or 6.3 percent, to A$12.12.

Crude oil rose more than $2 a barrel on signs the Organization of Petroleum Exporting Countries may cut output to halt a 50 percent drop in prices since July. In the U.S., Halliburton Co., the world's second-largest oilfield-services provider, jumped 14 percent, while Exxon Mobil Corp. added 10 percent.

Babcock & Brown Wind Partners (BBW AU), the wind energy producer managed by Babcock & Brown Ltd., increased 1.5 cents, or 1.5 percent, to 92.5 Australian cents, extending yesterday's 3.4 percent advance. The company will sell its Enersis unit in Portugal for 1.2 billion euros ($1.6 billion), Diario Economico reported, without saying where it obtained the information.

Rio Tinto Group (RIO AU), which is fending off a $70 billion hostile bid from BHP Billiton Ltd., increased A$3.95, or 6 percent, to A$70.24. The company said the sale of its Energy America coal unit may proceed this year.

To contact the reporter on this story: Ian C. Sayson in Manila at isayson@bloomberg.net

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Japan Stocks Rise on U.S. Stimulus Expectations, Bank Rates

By Masaki Kondo

Oct. 21 (Bloomberg) -- Japan stocks rose a third day on expectations the U.S. will introduce additional economic stimulus measures, boosting demand for Japanese-made products.

Honda Motor Co., which gets more than half its profit from North America, was poised to climb. Mizuho Trust & Banking Co. advanced 3.4 percent after a lending rate between banks fell the most in nine months. Mitsubishi Corp., which gets more than half its profit from commodities, was set to jump after oil rose.

``A decline in interbank lending rates eases concern about financial turmoil and boosts investors' appetite for stocks,'' Mamoru Shimode, chief equity strategist at Deutsche Bank AG, said in an interview with Bloomberg Television.

The Nikkei 225 Stock Average climbed 133.83, or 1.5 percent, to 9,139.42 as of 9:03 a.m. in Tokyo. The broader Topix index rose 12.87, or 1.4 percent, to 940.24.

Federal Reserve Chairman Ben S. Bernanke yesterday said lawmakers should consider new measures to improve access to credit for consumers and businesses. Stricter loan standards reduced spending for cars, driving U.S. auto sales down the most in 17 years last month and prompting Toyota Motor Corp. to offer no-interest loans in the country.

The London interbank offered rate, or Libor, which banks charge each other for three-month loans in dollars, fell by 36 basis points to 4.06 percent, according to the British Bankers' Association, the biggest decline in nine months. That suggests efforts by central banks to unfreeze credit markets is starting to take effect.

Crude oil for November delivery extended its gain to a third day today, after rising 3.3 percent to $74.25 a barrel on the New York Mercantile Exchange yesterday. A $1 change in the price of a barrel of oil alters Mitsubishi's annual net income by 1 billion yen ($9.8 million), according to Mitsubishi UFJ Securities Co.

Nikkei futures expiring in December dipped 0.4 percent to 9,050 in Osaka and gained 2.8 percent to 9,315 in Singapore.

To contact the reporter for this story: Masaki Kondo in Tokyo at mkondo3@bloomberg.net.

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Brazil's Real Little Changed as Central Bank Sells Dollars

By Drew Benson

Oct. 20 (Bloomberg) -- Brazil's real was little changed as the central bank sold dollars to shore up the currency.

The real climbed to 2.1182 per dollar at 4:54 p.m. New York time, from 2.119 on Oct. 17. The real has plunged 26 percent since it hit a record 1.5545 per dollar on Aug. 1.

The central bank sold dollars in the spot market at 2.121 per dollar. The currency erased early gains that saw it reach 2.076 per dollar. The bank also sold 16,000 currency swap contracts offered at an auction today and said it would sell 10,000 more tomorrow.

``The market is very volatile; the real can rise or fall 1 percentage point in 10 minutes with no problem,'' said Ovidio Pinho Soares, currency strategist in Sao Paulo at Finabank Corretora.

The central bank also held its first auction aimed at unfreezing lines of credit for exporters, offering to lend dollars at 0.11 percentage points over the 360-day dollar London interbank offered rate, or Libor. The bank accepted Brazilian sovereign global bonds as collateral and offered up to $2 billion.

Brazil's securities regulator, or CVM, has required companies to provide details about derivatives in their third- quarter earnings after some of the nation's top firms reported more than 5 billion reais of losses on bad currency bets.

The regulatory agency may extend that requirement beyond the third quarter and impose further restrictions once it has assessed the extent of derivative losses, CVM President Maria Helena Santana said during a speech today in Sao Paulo.

``We're going through a crisis of epic proportions,'' Santana said.

'Signs of Improvement'

Policy makers are moving in the right direction, said Andre Delben Silva, a partner at Advisor Asset Management, a Sao Paulo-based firm with about 600 million reais under management.

``We are starting to see signs of improvement, and that the measures taken by the government and central bank are starting to work,'' Delben Silva said.

``As long as we start to see some reduction in volatility in global markets, and that's something we're starting to see, there is more space for the real to strengthen,'' he added.

The yield on Brazil's overnight futures contract for January 2009 delivery declined 2 basis points, or 0.02 percentage point, to 13.92 percent. The yield on Brazil's zero- coupon bond due in January 2010 was little changed at 14.81 percent, according to Banco Votorantim.

To contact the reporter on this story: Drew Benson in Buenos Aires at Abenson9@bloomberg.net



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Asian Stocks Rise in U.S. as China Telecom, Panasonic Advance

By Lu Wang

Oct. 20 (Bloomberg) -- Asian stocks trading in the U.S. rose the most in a week after Federal Reserve Chairman Ben S. Bernanke endorsed additional fiscal stimulus for the world's biggest economy.

China Telecom Corp. jumped 12 percent after reporting higher earnings. Panasonic Corp. climbed to a two-week high after Goldman Sachs Group Inc. said the shares were ``oversold.''

The Bank of New York Mellon Asia ADR Price Index, which represents the region's American depositary receipts, jumped 7.9 percent to 103.33. Nikkei 225 Stock Average futures expiring in December were at 9,395 in Chicago, compared with 9,065 in Singapore and 9,090 in Osaka.

U.S. stock-indexes rallied, with the Standard & Poor's 500 Index gaining 4.8 percent after the Conference Board's index of leading economic indicators unexpectedly rose in September and Bernanke said lawmakers should consider new measures to improve access to credit for consumers, homebuyers and businesses.

China Telecom jumped 12 percent to $38.77. The country's biggest fixed-line phone company said third-quarter profit rose 1.3 percent to 5.62 billion yuan ($822.8 million) as higher sales of Internet connections helped compensate for lower voice revenue.

China Unicom (Hong Kong) Ltd., the second-biggest mobile- phone carrier that this month bought China Netcom Group Corp. to enter the fixed-line market, climbed 11 percent to $14.37.

Panasonic gained 12 percent to $16.49. Shares of the world's largest maker of consumer electronics may rise, Goldman analysts including Yuji Fujimori predicted in a note, citing ``unexpectedly firm'' business in Panasonic's plasma television panels division and the company's low inventory. Sony Corp., Panasonic's smaller rival, advanced 11 percent to $26.60.

Energy shares rallied as crude oil rose more than $2 a barrel on signs that the Organization of Petroleum Exporting Countries may cut output to halt a 50 percent drop in prices since July.

PetroChina Co., the nation's biggest oil producer, rallied 9.7 percent to $87.56. Santos Ltd., an Australian oil and natural gas company, added 8.2 percent to $33.

To contact the reporter on this story: Lu Wang in New York at lwang8@bloomberg.net.



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Canada Stocks Extend Rally as Petro-Canada, Barrick, Royal Soar

By John Kipphoff

Oct. 20 (Bloomberg) -- Canadian stocks rose for a second day, building on the main index's biggest weekly gain in six years, as commodity producers and financial companies climbed on higher crude-oil prices and lower borrowing costs.

Petro-Canada soared the most since trading began in 1991, helping energy stocks to their longest win streak in five weeks. Royal Bank of Canada led financial shares higher on speculation that the Bank of Canada will cut interest rates tomorrow, adding to recent global measures aimed at unlocking credit and boosting growth. Research In Motion Ltd. fell after an analyst said sales of its new Pearl Flip were ``disappointing.''

``Maybe all the bad things are in the market now,'' said Greg Eckel, who helps oversee about C$1 billion as a fund manager at Morgan Meighen & Associates in Toronto. ``Interest rates have come down. Clearly we still like our energy and materials stocks.''

The Standard & Poor's/TSX Composite Index rose 7.2 percent to 10,251.40 in Toronto, adding to a 5.5 percent gain last week. Canada's main stock benchmark has still slid 32 percent from its June 18 record as slumping commodities and more than $660 billion in credit losses at financial institutions worldwide dragged down the energy, raw-materials and financial shares that account for three-quarters of the index's value.

Stocks rallied around the globe today as money-market rates fell in Europe and Asia today after global central banks intensified efforts to combat a collapse in bank lending. The London interbank offered rate, or Libor, that banks charge each other for three-month loans in dollars fell by 36 basis points to 4.06 percent today, the British Bankers' Association said. The overnight Libor sank to the lowest in more than four years.

Energy Producers

Petro-Canada, the country's third-biggest oil and gas producer, jumped a record 20 percent to C$31. Canadian Natural Resources Ltd., the nation's fourth-largest energy company by market value, advanced 16 percent to C$58.55 for its steepest gain in 19 years.

Canadian Oil Sands Trust, lead partner in biggest oil-sands producer, rose a record 19 percent to C$31.32. Suncor Energy Inc., the world's second-biggest oil-sands mining company, added 16 percent to C$30.50, the most in 11 years. EnCana Corp., the nation's largest energy company, gained 14 percent to C$57.07. Imperial Oil Ltd., Canada largest oil and gas producer by output, gained 17 percent to C$42.75. Oilexco Inc. surged a record 34 percent to C$5.84.

Crude oil rose 3.3 percent to $74.25 a barrel in New York, on signs that the Organization of Petroleum Exporting Countries will cut output this week to halt a slide that has cut oil prices by half since July.

U.S. Rally

Energy companies also led the rally in the U.S.'s S&P 500 Index after oil shares including Exxon Mobil Corp., the parent of Canada's Imperial Oil, were raised to ``outperform'' at Oppenheimer & Co. on its profit prospects. Third-quarter earnings will be higher than in the previous year, and down ``sequentially'' because of the change in oil and gas prices, Oppenheimer analyst Fadel Gheit wrote in a report.

In Canada, energy producers including EnCana, Petro-Canada are scheduled to report third-quarter results this week.

Measures of energy and raw-materials producers climbed 13 percent and 10 percent, respectively, while an index of financial companies added 5 percent.

Potash Corp. of Saskatchewan Inc. and Barrick Gold Corp. led mining shares higher after prices for soybeans and corn advanced on speculation that the financial rescues in the U.S. and Europe may temper an economic slowdown. Gold and silver advanced in New York, while prices of copper and aluminum fell on expectations that demand for industrial metals will wane.

Miners' Shares

Barrick, the largest gold producer, gained 15 percent to C$32.33. Rival Goldcorp Inc. jumped 14 percent to C$26.75. Potash Corp., the world's biggest maker of crop nutrients, advanced 9.8 percent to C$97.43.

Royal Bank, the country's biggest lender by assets, advanced 7.7 percent to C$49.83. Manulife Financial Corp., Canada's biggest insurance company, added 6.8 percent to C$29.72. Canadian Imperial Bank of Commerce, the nation's fifth- largest bank, rose 5.2 percent to C$60.99. National Bank of Canada gained 5.2 percent to C$48.82.

The Bank of Canada said today that it will buy C$4 billion ($3.37 billion) of securities tomorrow from commercial banks and brokerages for 91 days to help credit markets function. The bank's move follows last weeks announcements by European and U.S. central banks and governments to inject $2 trillion in an effort to bail out banks and help restore investor confidence.

Rate Outlook

Canada's central bank will also cut borrowing costs tomorrow by as much as a half percentage point, according to forecasts from 23 economists surveyed by Bloomberg News. The Bank of Canada reduced its benchmark rate to 2.5 percent from 3 percent on Oct. 8 alongside other central banks to ease the credit crunch.

``Rates will probably come down again tomorrow,'' Eckel said. ``Financials have everything going in their favor now. We're starting to see some things working again. People have turned their minds back to earnings again.''

Research In Motion fell 7.6 percent to C$64.88, making a measure of computer-related shares the only one of 10 industries in the S&P/TSX to drop today. The gauge fell 5.7 percent.

Some stores have only sold one or two units of Research In Motion's new Pearl Flip handset since they went on sale in the U.S. on Oct. 13, according to a report today from Pacific Crest Securities analyst James Faucette in Portland, Oregon.

To contact the reporter on this story: John Kipphoff in Toronto at jkipphoff@bloomberg.net.



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American Express, Sun, Texas Instruments: U.S. Equity Preview

By Lu Wang

Oct. 20 (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 5:30 p.m. in New York, unless otherwise specified.

Standard & Poor's 500 Index futures expiring in December lost 5, or 0.5 percent, to 988. Dow Jones Industrial Average futures jumped 546, or 6.3 percent, to 9,317. Nasdaq-100 Index futures slipped 8.75, or 0.6 percent, to 1,351.25.

SanDisk Corp. (SNDK US) fell 41 cents, or 2.8 percent, to $14.01. The biggest maker of memory cards for digital cameras posted a second straight loss after an industry glut drove down prices. Excluding acquisition-related expenses, the loss was 59 cents a share, wider than the 27-cent average analyst estimate, according to a Bloomberg survey.

American Express Co. (AXP US) gained $1.49, or 6.1 percent, to $25.84. The biggest U.S. credit-card company by purchases said profit from continuing operations was 74 cents a share, beating the 59-cent average estimate of analysts surveyed by Bloomberg.

Netflix Inc. (NFLX US) fell 30 cents, or 1.3 percent, to $23.50. The largest U.S. mail-order movie service lowered fourth-quarter projections for the second time this month, saying it expects as many as 9.15 million subscribers by the end of the year.

Oracle Corp. (ORCL US) rose 26 cents, or 1.4 percent, to $18.42. The world's second-largest software maker said it would buy back as much as $8 billion in shares, bringing its total planned buyback to as much as $9.3 billion.

Sun Microsystems Inc. (JAVA US) lost 28 cents, or 4.8 percent, to $5.50. The world's fourth-largest maker of server computers said fiscal first-quarter sales probably amounted to $2.95 billion to $3.05 billion. That missed the average of $3.15 billion expected by analysts surveyed by Bloomberg.

Texas Instruments Inc. (TXN US) fell $1.21, or 6.7 percent, to $16.77. The second-largest U.S. semiconductor maker reported a 27 percent decline in third-quarter profit on fewer orders for mobile-phone chips. Its forecast for the current quarter missed some analysts' estimates.

To contact the reporter on this story: Lu Wang in New York at lwang8@bloomberg.net



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