Asian Stocks Drop to 4-Year Low on Growth Concerns; Mazda Falls

By Patrick Rial and Ian Sayson

Oct. 23 (Bloomberg) -- Asian stocks slumped, driving the region's benchmark index to the lowest level in four years, as Japanese exports missed estimates, commodities prices tumbled and South Korea's worst financial crisis in a decade deepened.

Mazda Motor Corp. plunged 11 percent as the yen surged against the euro and Japan's September exports rose a third as much as projected. Korea Electric Power Corp. declined 11 percent after forecasting a loss, while South Korea led a rout in emerging markets after Belarus requested aid from the IMF. BHP Billiton Ltd. and Rio Tinto Group fell more than 9 percent as European regulators signaled they may block a merger and raw materials prices dropped to a four-year low.

``Investors are fleeing risky assets,'' said Paul Joseph Garcia, who helps manage $1.33 billion as chief investment officer at ING Investment Management Ltd.'s Manila unit. ``After the hedge funds, long-term funds are now taking their turn and pulling money off the table to meet redemptions.''

The MSCI Asia Pacific Index lost 2.8 percent to 85.33 as of 5:12 p.m. in Tokyo, set for the lowest level since August 2004. The gauge, which has plunged 46 percent this year, trimmed losses after the Wall Street Journal said the U.S. government may spend $40 billion to reduce home foreclosures.

South Korea's Kospi index plunged as much as 9.4 percent and finished the day 7.5 percent lower as the won continued to tumble sparked by concerns about the nation's financial and economic health. Hong Kong's Hang Seng index fell below 14,000 for the first time in three years.

Generational Low?

Emerging-market stocks and currencies retreated for a second day as speculation Argentina may default on its debt sent capital out of countries perceived to be at risk. The cost of protecting Asia-Pacific bonds from default rose to a record as investors sought to minimize risk amid a worsening global economic outlook.

All Asian equity indexes lost ground. Japan's Nikkei 225 Stock Average lost 2.5 percent to 8,460.98. Isuzu Motors Ltd. led declines after saying it may miss its profit forecast this year.

Stocks pared declines after the Wall Street Journal reported the U.S. government is considering spending about $40 billion of its financial rescue package to stem increasing home foreclosures.

The Nikkei only needs to fall about 800 points to be back at a level last seen in 1982. The generation since then saw both the rise of Japan as a manufacturing superpower and subsequent deflationary spiral that hindered growth for more than a decade.

Standard & Poor's 500 Index futures added 1.4 percent in trading today. U.S. stocks slumped yesterday as the S&P lost 6.1 percent to the lowest since 2003.

Cheap Equities

Among the 990 members of the MSCI Asia benchmark, 47 percent trade at less than book value, meaning the company would be worth more if its assets were liquidated. A third of the gauge's shares carry dividend yields in excess of 5 percent. Conversely, only 25 percent of S&P 500 shares have price-to-book ratios of less than 1, while 17 percent yield more than 5 percent in dividends.

Mazda, which generates a quarter of its sales in Europe, slumped 11 percent to 220 yen, after earlier losing as much as 19 percent. Konica Minolta Holdings Inc., the world's second-largest maker of film used in liquid-crystal displays, plunged by its daily limit of 13 percent to 659 yen. Isuzu, which has seen sales drop 13 percent in Japan and 24 percent in the U.S. this year, dropped 9.6 percent to 170 yen after saying it might not meet its profit forecast.

Japan's exports, which drove almost all of the nation's growth last year, climbed 1.5 percent in September from a year earlier, missing economists' forecasts for a 5.1 percent increase.

Yen Gain

The yen surged to as high as 123.43 against the euro, the strongest since 2003, from 128.01 at the close of stock trading yesterday, cutting the value of overseas sales.

``The large swing in foreign exchange has raised a chance Japanese companies will have to cut their earnings forecasts even deeper,'' Mitsushige Akino, who oversees about $468 million at Tokyo-based Ichiyoshi Investment Management Co., said in an interview with Bloomberg Television.

Stocks in South Korea plunged amid concerns over the health of emerging markets, prompting an outflow of funds that sent the won tumbling. Belarus requested aid from the International Monetary Fund, joining Iceland, Pakistan, Hungary and the Ukraine in asking for assistance in weathering the global financial crisis.

Argentina's government plans to seize $29 billion in pension funds to meet the country's financing needs, a move that may presage the nation's second default in a decade. The MSCI Emerging Markets Index lost 3.3 percent today and is off 59 percent for the year.

Unwinding, Liquidation

``There's still plenty of uncertainty and nervousness out there,'' said Paul Xiradis, who manages $11 billion as chief executive officer of Ausbil Dexia Ltd. in Sydney. ``There's still some unwinding and liquidation taking place across the board.''

Korea Electric, the nation's biggest electricity producer, dropped 11 percent to 23,600 won after forecasting a 1.25 trillion won ($881 million) loss for 2008.

The won dropped 4 percent to the lowest since 1998 against the dollar. Standard & Poor's last week placed the nation's five biggest banks on review for a rating cut due to funding concerns, prompting a government bailout. The Kospi has lost more than a quarter of its value in October.

The Markit iTraxx Australia index of credit-default swaps was quoted 60 basis points higher at 360 as of 2:45 p.m. in Sydney, Citigroup Inc. data show. The Markit iTraxx Japan index climbed 22 basis points to 250 at 12:48 p.m. in Tokyo, according to prices from Barclays Capital. Prices rise as perceptions of credit quality decline.

Buying Protection

``People are seeing economies decelerating everywhere, including Asia, and more unwinding of hedge funds' long positions,'' said Brayan Lai, a credit analyst at Calyon in Hong Kong. ``With fear of defaults from Argentina and Pakistan, everybody is a net protection buyer in the emerging world.''

BHP lost 9.4 percent to A$24.70. Rio Tinto declined 15 percent to A$66.95. European Union regulators told lawyers for BHP that its $76 billion hostile bid for Rio Tinto Group may break antitrust rules, two people close to the case said.

China Petroleum & Chemical Corp., supplier of two-thirds of the nation's auto fuels, lost 4.7 percent to HK$5.04.

The Reuters/Jefferies CRB Index of 19 raw materials plunged 4.5 percent to 266.14, the lowest since July 27, 2004. A measure of six metals traded on the London Metal Exchange fell 5.9 percent, with copper dropping 7.6 percent. Crude oil for December delivery declined to the lowest settlement since June 2007 as the economic slowdown reduced fuel consumption.

Chinese Stimulus

Chinese property shares climbed after the central bank said it will cut minimum down payments on mortgages by a third and lowered the floor on home loan interest rates for first-time buyers. China Vanke Co., the country's largest publicly traded real-estate developer, advanced 4.4 percent to 6.89 yuan. Gemdale Corp., the Chinese developer that is setting up a real-estate venture with UBS AG, jumped 6.9 percent to 6.32 yuan.

Australia & New Zealand Banking Group Ltd., Australia's third-largest lender, dropped 5.2 percent to A$18.01 after second-half profit fell 35 percent to A$1.36 billion ($911 million) as provisions for delinquent loans surged.

DBS Group Holdings Ltd., Singapore's biggest bank, fell 4.7 percent to S$11.06 after saying yesterday it expects to spend as much as S$80 million ($53 million) to compensate customers who bought products tied to now-bankrupt Lehman Brothers Holdings Inc.

KDDI Corp. jumped 6.3 percent to 558,000 yen. Japan's second-biggest mobile-phone operator said yesterday a new payment plan led to a 24 percent increase in second-quarter profit.

To contact the reporter for this story: Patrick Rial in Tokyo at prial@bloomberg.net; Ian C. Sayson in Manila at isayson@bloomberg.net.

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French Stocks: Air France-KLM, Air Liquide, Alstom, Essilor

By Adam Haigh

Oct. 23 (Bloomberg) -- France's CAC 40 Index dropped 7.03, or 0.2 percent, to 3,291.15 at 9:11 a.m. in Paris, retreating for a second day. The SBF 120 Index also lost 0.2 percent.

The following shares rose or fell in Paris. Symbols are in parentheses after company names and prices are from the last close.

Air France-KLM Group (AF FP) lost 49 cents, or 3.6 percent, to 13.12 euros. Europe's biggest airline sees no growth in the current financial year and in the coming two years, Les Echos reported, citing comments Chief Executive Officer Jean-Cyril Spinetta made at a workers council.

Air Liquide SA (AI FP) added 94 cents, or 1.6 percent, to 61 euros. The world's biggest maker of industrial gases said third-quarter sales rose 10 percent to 3.25 billion euros ($4.1 billion) on higher demand for hydrogen used to make cleaner gasoline. This beat analysts' estimates of 3.22 billion euros, according to a Bloomberg survey.

Alstom SA (ALO FP), the world's third-largest power plant maker, slumped 3.715 euros, or 9.6 percent, to 34.89. ABB Ltd. today joined Schneider Electric SA and Eaton Corp. in flagging signs the credit crisis has started to affect spending among manufacturers and utilities. ABB, the world's largest builder of electricity grids, reported third-quarter orders that missed analyst estimates.

Carbone Lorraine SA (CRL FP), the maker of electric motor parts, climbed 47 cents, or 2.1 percent, to 22.69 euros. The company reported a 2.9 percent increase in third-quarter revenue to 179 million euros as sales of electrical protection equipment jumped.

Essilor International SA (EF FP) rallied 1.33 euros, or 4.8 percent, to 29. The world's largest maker of eyeglass lenses said third-quarter revenue rose 4.7 percent to 757.6 million euros, lifted by acquisitions and higher sales of its products in Latin America and Europe. That beat the 755 million-euro average estimate of nine analysts polled by Bloomberg News.

Gemalto NV (GTO FP) added 51 cents, or 2.3 percent, to 23.17 euros. The world's biggest maker of smart cards said third-quarter sales rose 4.3 percent to 417.8 million euros on demand for payment and security cards.

Icade SA (ICAD FP) gained 78 cents, or 1.7 percent, to 46.88 euros after the property company controlled by state- owned Caisse des Depots et Consignations said revenue rose 13 percent to 1.15 billion euros in the first nine months after the company made acquisitions and won building contracts.

To contact the reporter on this story: Adam Haigh in London at ahaigh1@bloomberg.net.

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U.K. Stocks Climb; Man Group, Lloyds TSB, Unilever Lead Advance

By Sarah Thompson

Oct. 23 (Bloomberg) -- U.K. stocks rose for the first time in three days, led by Man Group Plc and Lloyds TSB Group Plc, as investors speculated the recent sell-off in shares of financial companies was overdone.

Unilever and Reckitt Benckiser Plc gained after Nestle SA, the world's largest food company, said nine-month sales increased 3.4 percent and raised its forecast for annual revenue growth.

The FTSE 100 Index increased 20.97, or 0.5 percent, to 4,061.86 at 9:02 a.m. in London. The FTSE All-Share index advanced 0.4 percent and Ireland's ISEQ index gained 2.2 percent.

Japan's Nikkei 225 Stock Average lost 3.1 percent to 8,408.60, paring a drop of as much as 7.6 percent earlier today.

``The turn-around in Asia has inspired investors in the U.K. to take the plunge,'' said Mark Outten, senior dealer at GFT Global Markets in London. ``There's been a lot of volatility and people are really just dipping a toe in at this stage.''

Man Group, the world's largest publicly traded hedge fund management company, added 3.8 percent to 367.5 after the net asset value of its largest fund, AHL Diversified Plc, gained 1.9 percent to $38.04.

Lloyds TSB, one of the lenders making use of the U.K. government's 37 billion-pound ($63 billion) bailout program, increased 2.7 percent to 172. The stock has fallen 64 percent this year.

Unilever, the world's second-largest consumer-products, added 4 percent to 1,411 pence. Sales climbed to 81.36 billion Swiss francs ($70 billion) from 78.71 billion francs a year earlier, Switzerland-based Nestle said today. Nestle expects annual revenue growth before acquisitions, divestments and currency fluctuations to be about 8 percent, up from at least 7.4 percent.

Reckitt, the world's largest maker of household cleaners, advanced 3 percent to 2,501.

The following stocks also gained or fell in the U.K. market. Stock symbols are in parentheses.

U.K. companies:

Cattles Plc (CTT LN) added 2 pence, or 5.8 percent, to 36.75. The U.K. provider of subprime loans said earnings in the second half of the year are meeting its forecast as it progresses with a plan to get a banking license.

Informa Plc (INF LN) advanced 7.25 pence, or 3.5 percent, to 213.25. The U.K. publisher of Lloyd's list said full-year revenue will be in line with management expectations, with publishing sales increasing 10 percent in the year to date.

Go-Ahead Group Plc (GOG LN) increased 37 pence, or 2.4 percent, to 1,570. The biggest bus operator in London said first- quarter trading is in line with expectations.

InterContinental Hotels Group Plc (IHG LN) gained 11 pence, or 2.1 percent, to 547. The owner of the Crowne Plaza lodging brand was raised to ``buy'' at UBS AG, which said ``the 50 percent decline in the stock over the last 12 months looks exaggerated.''

Raymarine Plc (RAY LN) slumped 33.25 pence, or 53 percent, to 30. The U.K. maker of electronic marine products such as fish- finders said full-year profit will ``significantly'' miss analysts' estimates as fewer boats are built.

Wolseley Plc (WOS LN) increased 1.25 pence, or 0.4 percent, to 306. The world's biggest distributor of plumbing and heating equipment will fire 3,000 jobs at its unprofitable U.S. Stock Building Supply unit following the worst housing slump since the Great Depression and a failed attempt to sell the business.

To contact the reporters on this story: Kevin Crowley in London kcrowley1@bloomberg.netSarah Thompson in London at sthompson17@bloomberg.net.

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Greenspan Urges Tighter Regulation After `Breakdown'

By Scott Lanman and Steve Matthews

Oct. 23 (Bloomberg) -- Former Federal Reserve Chairman Alan Greenspan called for tighter regulation of financial companies, distancing himself from the free-market culture that he helped to create.

Firms that bundle loans into securities for sale should be required to keep part of those securities, Greenspan said in prepared testimony to the House Committee on Oversight and Government Reform. Other rules should address fraud and settlement of trades, he said. Greenspan's office released the text ahead of the hearing scheduled for 10 a.m. in Washington.

The comments contrast with Greenspan's aversion to increasing financial supervision as Fed chairman from August 1987 to January 2006. He said in a May 2005 speech that ``private regulation generally has proved far better at constraining excessive risk-taking than has government regulation.''

Today, the former chairman asked: ``What went wrong with global economic policies that had worked so effectively for nearly four decades?'' During his term at the Fed's helm, Greenspan repeatedly warned lawmakers against inhibiting markets, such as by tightening oversight of certain types of derivatives.

Greenspan, reiterated his ``shocked disbelief'' that financial companies failed to execute sufficient ``surveillance'' on their trading counterparties to prevent surging losses. The ``breakdown'' was clearest in the market where securities firms packaged home mortgages into debt sold on to other investors, he said.

`No Choice'

``As much as I would prefer it otherwise, in this financial environment I see no choice but to require that all securitizers retain a meaningful part of the securities they issue,'' Greenspan said. That would give the companies an incentive to ensure the assets are properly priced for their risk, advocates say.

The rout sparked by the collapse of the U.S. subprime mortgage market has cost financial institutions worldwide $659 billion in writedowns and losses since the start of last year. Firms have raised $642 billion of capital in response.

``We are really going to have to rebuild this system from the ground up,'' Paul Volcker, who was Greenspan's predecessor, said at a conference late yesterday in New York. The creation of complex financial products, ``instead of spreading the risk and creating transparency'' wound up concentrating risk and ``opaqueness,'' Volcker told the Columbia University's Women's Economic Round Table.

Magnitude of Crisis

Volcker, 81, said the current crisis is more complex than any other in U.S. history. Greenspan, 82, called it a ``once-in-a century credit tsunami.''

House Financial Services Committee Chairman Barney Frank called this week for a freeze on executive bonuses and other stronger regulation of Wall Street, following passage of a $700 billion rescue plan for financial institutions.

Frank said in a hearing in February that Greenspan ``erred'' in ``his view that regulation was almost never required.'' Greenspan ``often told us'' that there were two options: ``I can either deflate the entire economy or I can let the problems continue,'' Frank said.

Securities and Exchange Commission Chairman Christopher Cox and former Treasury Secretary John Snow are also scheduled to appear at the House committee hearing today.

Root Cause

The credit crisis was rooted in a ``surge in global demand'' for U.S. subprime-mortgage debt, fed by ``unrealistically positive rating designations by credit agencies,'' Greenspan said. ``Whatever regulatory changes are made, they will pale in comparison to the change already evident in today's markets.''

Before the crisis intensified last month with the bankruptcy of Lehman Brothers Holdings Inc., Greenspan said markets should still be allowed to police themselves.

``I hope that one of the casualties will not be reliance on counterparty surveillance, and more generally financial self- regulation, as the fundamental balance mechanism for global finance,'' Greenspan wrote in the Financial Times in March.

His successor, Ben S. Bernanke, has tried to revive credit during the past 15 months with an expansion of lending unprecedented since the Great Depression.

Bernanke has cut interest rates to 1.5 percent from 5.25 percent, made loans available to investment firms for the first time since the 1930s and arranged rescues of Bear Stearns Cos. and American International Group Inc.

Economic Impact

``Given the financial damage to date, I cannot see how we can avoid a significant rise in layoffs and unemployment,'' Greenspan said today. There will probably be a ``marked retrenchment of consumer spending,'' he said, and a stabilization of home prices ``is still many months in the future.''

``To avoid severe retrenchment, banks and other financial intermediaries will need the support that only the substitution of sovereign credit for private credit can bestow,'' Greenspan said. The $700 billion rescue program, under which Treasury will inject capital into banks and buy distressed assets, is ``adequate to serve that need,'' he said.

Former Fed Governor Edward Gramlich, who died in 2007, had urged Greenspan to strengthen oversight of banks during the record U.S. mortgage boom from 2004 to 2006.

Greenspan said in a Bloomberg News interview in January that criticism of his record ignores the limits on what regulation and monetary policy can achieve.

Since retiring, Greenspan has returned to his role as a private economic forecaster, speaking at conferences and to groups of bankers and investors, while consulting for clients such as Deutsche Bank AG.

To contact the reporter on this story: Scott Lanman in Washington at slanman@bloomberg.net; Steve Matthews in Atlanta at smatthews@bloomberg.net.

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Goldman, Coller May Buy Stakes in Lehman's Private Equity Funds

By Jonathan Keehner and Serena Saitto

Oct. 23 (Bloomberg) -- Goldman Sachs Group Inc., Coller Capital and Lexington Partners Inc. are weighing bids for Lehman Brothers Holdings Inc.'s investments in U.S. and European private-equity funds, people with knowledge of the matter said.

Lehman is trying to sell stakes in real estate, merchant banking and venture-capital funds with about $15 billion of assets, according to the people, who declined to be identified because the talks are confidential. The venture capital portion is expected to be sold by November, the merchant holdings and real estate by year end. As many as a dozen potential buyers have indicated interest, one of the people said.

The disposals may lead a wave of so-called secondary sales, as investors seek to buy others' stakes in private-equity funds at distressed prices. Between $12 billion and $15 billion of secondary interests changed hands last year, and the figure may double in the next 12 months as banks with credit-market losses try to raise cash and pare hard-to-value holdings, according to Coller Capital's Frank Morgan.

``I don't know of a bank that's not considering selling non- core assets including private-equity interests,'' said Morgan, a Coller partner in New York. The London-based firm invests in buyout and venture-capital funds and raised $4.8 billion last year for a fund targeting secondary sales.

Morgan declined to comment on the pending Lehman sale. Representatives of New York-based Lexington, which oversees $10.2 billion of secondary private-equity funds, and Goldman Sachs, which raised $3 billion last year for a fund that invests in secondary sales, declined to comment. Officials at Lehman and Lazard Ltd., which is managing the sale, also declined to comment. Goldman, Lehman and Lazard are based in New York.

D.E. Shaw, SRAM

``The investment teams for these funds remain intact and focused as we actively pursue the best strategic alternatives for these businesses,'' Lehman said in an Oct. 2 statement. ``As always, a primary consideration is the best interests of our investors.''

Once the fourth-largest securities firm in the U.S., Lehman filed the biggest bankruptcy in the nation's history on Sept. 15. A crisis of confidence in Wall Street firms had eroded 94 percent of the company's market value since the beginning of the year.

The fund stakes Lehman plans to dispose of were left behind when the firm agreed to sell most of its investment management business to private-equity firms Bain Capital LLC and Hellman & Friedman LLC on Sept. 29. That sale was challenged by Carlyle Group, the world's second-largest private-equity firm, which may make its own bid by December.

Lehman's private-equity assets include stakes in New York- based hedge-fund firm D. E. Shaw & Co. and investments in companies such as Angelica Corp., the Chesterfield, Missouri- based hospital linens provider, and SRAM Corp., the Chicago-based bicycle components company.

`Perfect Opportunity'

An unresolved question that may complicate the sale is how the funds, which include commitments from institutions other than Lehman, will be managed. Fund managers from Lehman are considering buying some of the general partnerships that oversee the funds, according to two people familiar with the matter.

As more banks seek to shed stakes in private funds, the growing inventory of distressed assets may stoke concern about their diminishing value. Fund interests are already fetching discounts of as much as 25 percent compared with a year ago, said Craig Marmer, a partner at secondary placement agent Probitas Partners in San Francisco.

``It's a perfect opportunity for established secondary funds,'' said Marmer. ``Those teams that are really experienced will be out raising even more money.''

To contact the reporters on this story: Jonathan Keehner in New York at jkeehner@bloomberg.net; Serena Saitto in New York at ssaitto@bloomberg.net.

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European Stocks, U.S. Index Futures Advance; Asian Shares Fall

By Sarah Jones

Oct. 23 (Bloomberg) -- European stocks climbed after Nestle SA's forecast and Syngenta AG's results eased concern that the economic slump will stifle profit growth and shares trading near their cheapest on record lured investors. U.S. index futures advanced, while Asian shares declined.

Nestle, the world's largest food company, gained 4.5 percent after raising its forecast. Syngenta, the biggest maker of agricultural chemicals, climbed 3.7 percent. BHP Billiton Ltd. and Rio Tinto Group dropped more than 5 percent as copper fell below $4,000 a ton.

Europe's Dow Jones Stoxx 600 Index added 0.5 percent to 210.51 at 8:49 a.m., snapping a two-day decline. Futures on the Standard & Poor's 500 Index rose 1.6 percent, while the MSCI Asia Pacific Index slipped 3.3 percent.

``A whole raft of equities are cheap,'' said Jane Coffey, head of equities at Royal London Asset Management, which oversees about $63 billion. ``I would go with stocks that you feel more confident about their earnings. Nestle is a great example. They really do look like they are at the top of their game.''

The Stoxx 600 has plunged 43 percent in 2008 as credit- related losses and writedowns topped $660 billion in the worst financial crisis since the Great Depression.

Europe's Stoxx 600 was valued at 8.7 times the reported earnings of companies in the index yesterday. It traded at 8.5 percent times earnings on Oct. 10, the lowest level on record, and has averaged 16.2 times over the past five years based on weekly data compiled by Bloomberg. The MSCI World Index traded for 11.4 times the profit of its 1,730 companies, while the S&P 500 was valued at 18.3 times earnings.

Nestle, Syngenta

Nestle rose 4.5 percent to 44.90 francs after the company said nine-month sales increased 3.4 percent to 81.36 billion Swiss francs ($70 billion) and raised its forecast for annual revenue growth, helped by higher prices to cover costs for sugar, coffee and cocoa.

Syngenta climbed 3.7 percent to 174.4 francs after the chemical company said third-quarter sales climbed 33 percent to $2.28 billion, beating analyst estimates, as rising demand for grains encouraged farmers to buy more pesticides. Analysts surveyed by Bloomberg estimated sales of $2.06 billion.

Lowered Estimates

Analysts have cut profit forecasts this year as the credit turmoil spread, threatening economic growth. Earnings for companies in the Stoxx 600 will decline 4.4 percent in 2008, down from 11 percent growth predicted the start of the year, according to estimates compiled by Bloomberg.

ABB Ltd., the world's largest builder of electricity grids, slipped 12 percent to 14.91 francs after saying orders at the Zurich-based supplier of factory robots and power substations advanced 7 percent to $8.89 billion. That is down from 33 percent growth a year earlier and short of the $9.56 billion predicted by analysts. Net income rose to a record $927 million, also short of analyst calculations.

BHP Billiton, the world's largest mining company, dropped 5.8 percent to 829 pence. Rio Tinto, the third-biggest mining company, sank 8.1 percent to 2,195 pence.

Copper led a retreat by base metals on the London Metal Exchange, falling below $4,000 a ton for the first time since November 2005. Gold dropped to the lowest in more than a year as the dollar gained.

Rio Tinto, fending off a $66 billion hostile bid from BHP, said the slump in nickel price is hurting producers in Western Australia. consumer confidence.

Credit Suisse Group slipped 2.7 percent to 45.3 pence after the Swiss bank posted a third-quarter loss of 1.26 billion Swiss francs ($1.08 billion), compared with a profit of 1.3 billion francs a year ago. The result was in line with a preliminary estimate Credit Suisse announced last week.

To contact the reporter on this story: Sarah Jones in London at sjones35@bloomberg.net.

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Alfa, Alsea, Ecopetrol, Natura, Pampa: Latin Equity Preview

By James Attwood and William Freebairn

Oct. 23 (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 14 percent to 1,902.31 yesterday.

Argentina

Pampa Holding SA (PAMP AF): The electricity holding company lowered the price on a planned share buyback to a range of 50 centavos to 1.3 pesos, it wrote in a regulatory filing yesterday. Pampa canceled a public purchase offer announced Oct. 14, which was priced at 1.10 pesos to 1.35 pesos. Pampa fell 6.7 percent to 84 centavos, extending a loss since the previous buyback was announced to 30 percent.

Brazil

EZ Tec Empreendimentos e Participacoes SA (EZTC3 BS): The real-estate developer said third-quarter contracted sales rose 24 percent to 90 million reais ($37.7 million). The value of new projects declined to 41 million reais in the quarter, compared with 65 million reais a year ago, EZ Tec said in a statement sent yesterday. EZ Tec fell 10 percent to 1.95 reais.

Natura Cosmeticos SA (NATU3 BS): Brazil's biggest cosmetics company said third-quarter profit rose 32 percent from the year- earlier period to 154 million reais. Natura fell 2.3 percent to 17.01 reais.

Chile

Cencosud SA (CENCOSUD CC): Chile's biggest retailer is scheduled to open its first Easy home improvement store in Bogota, Colombia, today. Cencosud fell 13 percent to 1,005 pesos.

Colombia

Ecopetrol SA (ECOPETL CB): Colombia's state oil company and two subsidiaries of BP Plc will jointly drill for natural gas at depths of more than 20,000 feet in the Gulf of Mexico off the Texas coast. The companies will spend $120 million on the first phase of exploration, Ecopetrol said yesterday. Ecopetrol fell 5.3 percent to 2,055 pesos.

Mexico

Alfa SAB (ALFAA MM): The world's largest maker of aluminum engine heads and blocks received $225 million in loans after posting a loss from derivative investments. The loans vary in maturity from six months to a year and are mostly in dollars, Chief Financial Officer Alejandro Elizondo said. Alfa fell 9.4 percent to 28.77 pesos.

Alsea SAB (ALSEA* MM): The operator of Starbucks Coffee shops and Domino's Pizza franchises in Mexico said third-quarter net income fell 67 percent to 39.3 million pesos ($2.9 million), or 40 centavos a share, from a year earlier. Alsea fell 6.5 percent to 6.50 pesos.

To contact the reporters on this story: James Attwood in Santiago at jattwood3@bloomberg.net; William Freebairn in Mexico City at wfreebairn@bloomberg.net.



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US Dollar Still The Safe-Haven Of Choice - More Gains In Store?

Daily Forex Fundamentals | Written by DailyFX | Oct 23 08 02:00 GMT |

US Dollar Still the Safe-Haven of Choice – More Gains in Store? Euro, British Pound Remain Under Pressure on Negative Outlooks from IMF, BOE's King New Zealand Dollar, Australian Dollar Show Signs of Bottoming Japanese Yen Remains Unstoppable as Volatility Surges US Dollar Still the Safe-Haven of Choice – More Gains in Store? Despite dismal fundamentals, the US dollar rally continues to dominate as it remains one of the strongest currencies, second only to the Japanese yen. The Federal Reserve is still struggling to stabilize the markets as banks remain worried about counterparty risk and are avoiding lending. As a result, the Fed said they would raise the interest rate paid on bank reserve balances in an attempt to keep liquidity in the financial system without impacting their monetary policy. For all intents and purposes, the Fed is having little impact and risk aversion rules the US stock markets spiraled lower, with the DJIA closing down over 500 points. Likewise, US Treasuries surged on flight to quality while the CBOE's VIX volatility index jumped back up to 69.65 from 53.11. Though the VIX is below last Friday's record of 70.33, it is still at historically high levels as anything above 40 was once a rare event. With volatility unlikely to die down anytime soon, it isn't really worth it to try to fight the long-term dollar bullish trend. Indeed, given the drop in gold - a classic safe-haven asset - it appears that price action throughout the financial markets constitutes deleveraging and mass movements to cash. Euro, British Pound Remain Under Pressure on Negative Outlooks from IMF, BOE's King The British pound and continued their freefall on Wednesday, as GBP/USD stabilized above 1.6150 while EUR/USD tested 1.2750. Most of the declines actually came during the Asian trading session as risk aversion remained the predominant sentiment in the markets, leading anti-dollar trades like the euro and British pound along with Japan's stock markets lower. In fact, the Nikkei 225 ended the day down 6.79 percent while the Topix plunged a whopping 7.05 percent. The major news for Europe came a few hours later, though, with the most shocking revelation coming from Bank of England Governor Mervyn King who said the UK economy was likely headed for recession. This was followed by the release of the minutes from the Bank of England's October 8 meeting, which showed that the 50bp cut to 4.50 percent implemented that day was by a unanimous vote. Given the substantial downside risks to growth, persistence of the credit crunch, and broad dovish bias amongst the BOE's Monetary Policy Committee members, it is clear that the central bank will be cutting rates multiple times in coming months, and in fact, Credit Suisse overnight index swaps are pricing in nearly 175bp worth of reductions during the next year. Meanwhile, a damning outlook from the International Monetary Fund (IMF) spurred fears about the Euro-zone's financial sector. In its October 2008 Regional Economic Outlook for Europe, the IMF warned that more European banks could fail “as implied by their very high risk spreads and market doubts about the viability of their business models.' With a recovery not expected until late 2009, the European Central Bank (ECB) may be forced to make monetary policy significantly more accommodative going forward. Though the ECB is not anticipated to cut rates at their next meeting on November 6, Credit Suisse overnight index swaps are pricing in over 100bps worth of reductions over the next 12 months. Taking into account the dovish prospects for the UK and Euro-zone there are obvious downside risks for the British pound and euro, and until risk aversion starts to fade, these currencies will continue to have bearish potential. New Zealand Dollar, Australian Dollar Show Signs of Bottoming Commodity dollars like the Canadian dollar and New Zealand dollar slipped for much of Wednesday's trading session, but the latter saw a surprising bounce following the Reserve Bank of New Zealand's (RBNZ) rate decision. Indeed, the RBNZ slashed their Overnight Cash Rate (OCR) target by 100bps to 6.50 percent, which is the sharpest cut since the OCR was introduced in March 1999. This move was in line with expectations, and though RBNZ Governor Bollard said that he expects rates will be lowered further, the New Zealand dollar gained. Why? A closer look at the policy statement shows that Mr. Bollard also suggested that rates could be left steady at their next policy meeting, as he said that further cuts depend on 'evidence of actual reductions in domestic cost pressures as well as how the global financial developments play out.' Furthermore, during a post-meeting press conference, Mr. Bollard said future rate cuts 'won't necessarily be of this size.' As a result, the markets are betting that the RBNZ will await additional data before making monetary policy more accommodative, and will do so at a slower pace. This decision may have a major impact on currencies going forward, as the RBNZ has essentially thrown a wrench in the market's expectations that interest rates would be cut aggressively in coming months by central banks with high overnight lending rates. If we see the New Zealand dollar gain overnight, there will be reason to believe that it may have formed at least a short-term bottom. Since the New Zealand dollar and Australian dollar hold a very tight correlation, this would also bode well for Aussie. Japanese Yen Remains Unstoppable as Volatility Surges The Japanese yen was easily the strongest currency in the markets on Wednesday, as a lingering risk aversion and a surge in volatility (as measured by the VIX Index) led to broad selloffs in the equity and commodity markets. In fact, even gold - a classic safe-haven asset - plummeted over $50/oz, suggesting these market declines constitute deleveraging and mass movements to cash. As usual, this sentiment led the low-yielding yen to rocket higher across the majors, gaining nearly 3 percent against the US dollar and Aussie, and more than 5 percent against the British pound, Kiwi, and Loonie. Overall, it will take a serious recovery in investor sentiment, or at least a bounce in the stock markets, before the Japanese yen will start to give up some of these massive gains. That said, with EUR/JPY trading near its November 2003 lows and GBP/JPY hitting the lowest levels since 2000, traders should be wary of trying to buy back into carry trades. We may be nearing a bottom for pairs like these, but it would be more prudent to await clear signs of a reversal. DailyFX Disclaimer Investment in the currency exchange is highly speculative and should only be done with risk capital. Prices rise and fall and past performance is no assurance of future performance. This website is an information site only. Accordingly we make no warranties or guarantees in respect of the content. The publications herein do not take into account the investment objectives, financial situation or particular needs of any particular person. Investors should obtain individual financial advice based on their own particular circumstances before making an investment decision on the basis of the recommendations in this website. While we try to ensure that all of the information provided on this website is kept up-to-date and accurate we accept no responsibility for any use made of the information provided. All intellectual property rights are the property of Daily FX. Daily FX and its affiliates, will not be held responsible for the reliability or accuracy of the information available on this site. The content herein is provided in good faith and believed to be accurate, however, there are no explicit or implicit warranties of accuracy or timeliness made by Daily FX or its affiliates. The reader agrees not to hold Daily FX or any of its affiliates liable for decisions that are based on information from this website. Daily FX highly recommends that before making a decision, the reader collects several opinions related to the decision and verifies facts from at least several independent sources.

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Dow Crash On Missed Earnings And Recession Concerns

Daily Forex Fundamentals | Written by Easy Forex | Oct 23 08 01:36 GMT |

U.S. Dollar Trading (USD) jumped to 5 year highs on the back of the Euro breaking 1.3000 and GBP crumbling. Huge repatriation of some of the $1 trillion US investors have sent overseas since 2003 helped to boost the USD. Stocks continue to sag though as earning came in relentlessly poor. In the U.S. share markets, the NASDAQ was down -80 points (-4.77%) and the Dow Jones was down -515 points (-5.69%). Crude Oil closed down $-5.43 ending the New York session at $66.75 per barrel. Looking ahead, Weekly Jobless Claims expected at 470K vs. 461K previously. The Euro (EUR) broke through 1.3000 during the Asian session as heavy EUR/JPY forced the major through the major support. The pair then quickly plunged a further 250 pips as GBP also broke supports at 1.65 and Nikkei losses mounted leading to a near capitulation on the second reserve currency of the world. Overall the EUR/USD traded with a low of 1.2740 and a high of 1.3077 before closing the day at 1.2850 in the New York session. Looking ahead, Eurozone Current account previously at -1.1Billion. Also release August Industrial Orders expected at 0.3% vs. 1% m/m. The Japanese Yen (JPY) stronger than even the USD the Yen gains against all pairs during Asia and then again in the US as stock losses mounted. Massive gains against the EUR/JPY and GBP/JPY lead the charge. Overall the USDJPY traded with a low of 97.23 and a high of 100.57 before closing the day around 97.70 in the New York session. Looking ahead, September Japanese Trade Balance seen at 600B Yen and Exports are seen jumping 5.2%. The Sterling (GBP) crumbled as the market stepped away from buying as key levels were broken and the market focused on BOE King’s comments that the UK was in recession. The GBP took the title of the worst performing currency. MPC voted 9-0 for the recent 0.5% interest cut. Overall the GDP/USD traded with a low of 1.6130 and a high of 1.7720 before closing the day at 1.6240 in the New York session. Looking ahead, September Retails are expected at -0.9% vs. 1.2%. The Australian Dollar (AUD) held up remarkably well given the rise in risk aversion and large falls in commodity prices. Q3 CPI was stronger than expected coming in at 5.0% Y/Y well above the RBA target 2-3% band but will not be influencing the Bank stance on future interest rate cuts given the current market turmoil. Overall the AUD/USD traded with a low of 0.6635 and a high of 0.6825 before closing the US session at 0.6750. Gold (XAU) crashed through year lows as the USD surged and Oil continued to plumb new lows. Overall trading with a low of USD$721.60 and high of USD$775 before ending the New York session at USD$279 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 23 08 01:30 GMT |

News And Views USD Index was curiously quiet and range-bound in London/NY after brutal price action in Asia-Pacific trade Wed, even paying little attention to heavy losses on Wall Street. Three month USD LIBOR fell for an eighth straight session, -29bp to 3.54% while overnight dollars slid to a 4 year low of 1.12% (this peaked on 30 Sep at 6.875%). But worries over emerging markets deepened, with Brazil's Bovespa -9% in afternoon trade and Argentina's Merval -18% as its desperate government planned to take over private pension funds. NZD/USD recaptured the 0.6000 handle for a while in London but jagged below 0.5900 in NY as traders counted down to the RBNZ decision and AUD/NZD marched firmly from 1.1150 to over 1.1400. AUD/USD stabilized quite well after sliding in the scramble for USD in the London morning, recovering from its 0.6630 low to spend most of NY trade above 0.6700, despite US equity losses. After wild selling in Asia-Pac trade, EUR/USD steadied in the mid-1.2800s in London/NY, showing no great inclination to either keep sliding or bounce. European stock markets were routed, the DJ Euro Stoxx 50 -5.4%. USD/JPY saw occasional fleeting rallies but mostly continued its two-day downward trend, to 98.25 in the NY afternoon. No US data to report. Japan August all-industry index declined 1.8%mth following 0.8%mth gain in July, painting a picture of a slowdown in Japanese production, amid signs of a global downturn. This followed the rebound of the index in Q2 after declining in Q1 suggesting a faltering growth profile this year. The August all-industry index included earlier reports showing tertiary index declining 1.4%mth, in sympathy industrial production falling 3.5%mth. These were partly balanced by the construction sector rebounding 1.9%mth after sinking in July to its lowest level in over a decade. Bank of England minutes reveal unanimous 9:0 vote to cut 50bp on October 8. The economy had 'deteriorated substantially', which meant that inflation would slow towards the 2% target more quickly than previously thought, 'making a strong argument for participating in the proposed co-ordinated international action'. Speaking yesterday, BoE Governor King admitted the economy was now 'entering recession', paving the way for further easing in coming months. Canadian retail sales down 0.3% in Aug. Weakness in auto sales was compounded by falling gasoline sales (due to lower prices). Other sales were mixed, with apparel down for the second month running but food and building supplies posting gains. In other news, the Sep leading index fell 0.2%, its first decline since March this year, suggesting that the growth outlook is deteriorating again. Outlook The Q3 CPI was as expected and should not affect the RBNZ's decision today. We continue to expect a 100bp cash rate cut which should help limit the scope of any NZD/USD rallies but of course eyes mostly remain on the US. Events Today Country Release Last Forecast NZ RBNZ OCR Review 7.50% 6.50% US Initial Jobless Claims w/e 18/11 461k 465k Aug House Prices –0.6% –0.5% Jpn Sep Trade Balance ¥bn –113 131 Eur Aug Current Account €bn –1.7 – Aug Industrial Orders 1.00% 1.50% UK Sep Retail Sales 1.20% –1.5% Sep Housing Loans £bn 21.1 – Can BoC Monetary Policy Report 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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AUDUSD Only One Of A Handful Of Range Opportunities

Daily Forex Technicals | Written by DailyFX | Oct 23 08 02:03 GMT |

Why Would AUDUSD Stay in a Range? Levels to Watch: Range Top: 0.6625 (Trend, Rang high) Range Bottom: 1.5800 (Trend, Fib, Rang Low) It is very risk to try and pick ranges in the kind of market conditions we have seen today. A global wave of risk aversion has sent many dollar pairs and all the yen pairs rallying in favor of their respective safe haven components. One of the very few opportunities still out there is the congestion seen in AUDUSD. However, this pair seems to be carving a wedge (a common prelude to a breakout) and interest rate expects have significant weight here. While the technicals are otherwise clear for AUDUSD's congestion, high volatility could easily encourage a run on the range extremes. Spot is now near support which is called in a rising trendline and a double bottom around 0.6600/25. Resistance is put into place with a falling trendline and its own range high at 0.7035/75. Suggested Strategy Short: Considering volatility, an aggressive entry at 0.7025 is essential. Stop: Just as we need a high entry to reduce risk, we need a wide initial stop at 0.7100. When the first lot hits its target, we will move the second lot's stop up to breakeven. Target: Our first target will match risk (75) at 0.6950. Second objective will be 0.6825. Trading Tip - Only those traders that are highly risk tolerant should consider range trades in the kind of market environment that we have experienced recently. With that disclaimer out of the way, our AUDUSD setup was one of the very few in the market. What's more, we are not comfortable with taking the long side of this congestion zone as the broad wave of risk aversion leverages the potential for a downside breakout - not to mention the dominant trend is bearish. Our short-side trade looks to enter near the falling trend that happens to double as a range high - a decent technical setup. It is still important however, even though we are keeping to the larger trend, to remain keep tight stops. Furthermore, we need to be realistic and appreciate that market conditions can change very quickly considering the level of volatility and the presence of panic circulating through the market. As such, we will cancel our entry orders should AUDUSD break lower or they not be filled by Friday. Event Risk Australia And US Australia - Risk sentiment easily overwhelms any other fundamental concerns for the Australian dollar. With the market looking to deleverage risk, investments that are based on Australia's high benchmark rate are clear candidates. This sentiment is doubled by the dour interest rate and economic conditions forecasts. Australia, until a few months ago, was considered one of the few economies that would avoid the slump that was overtaking the US and Europe. Recently, however, investors and market commentators have seen that the slowdown is global and the Australasian dollar will have to find a balance as an equal to other economies that are looking to recession (like the US). What's more, the sharp drop in growth has led to a sharp drop in interest rate expectations - one of the key selling points of the Aussie currency. From the docket, data will merely gauge the health of lending and growth. US - Data for the remainder of the week doesn't threaten much in the way of translated price action. Instead, the market will continue to gauge whether US interest rates will bottom out soon (and further whether the US dollar is a viable funding currency) and if the recession State-side will be shorter and shallower than its major counterparts. Looking beyond the weekend, we can see the threat of major event risk. The FOMC rate decision is completely up in the air after the unexpected 50 basis point rate cut from yesterday and considering how low it already is at current levels. Also, the advanced GDP reading will offer either confirmation or a correction to expectations of the worst. DailyFX Disclaimer Investment in the currency exchange is highly speculative and should only be done with risk capital. Prices rise and fall and past performance is no assurance of future performance. This website is an information site only. Accordingly we make no warranties or guarantees in respect of the content. The publications herein do not take into account the investment objectives, financial situation or particular needs of any particular person. Investors should obtain individual financial advice based on their own particular circumstances before making an investment decision on the basis of the recommendations in this website. While we try to ensure that all of the information provided on this website is kept up-to-date and accurate we accept no responsibility for any use made of the information provided. All intellectual property rights are the property of Daily FX. Daily FX and its affiliates, will not be held responsible for the reliability or accuracy of the information available on this site. The content herein is provided in good faith and believed to be accurate, however, there are no explicit or implicit warranties of accuracy or timeliness made by Daily FX or its affiliates. The reader agrees not to hold Daily FX or any of its affiliates liable for decisions that are based on information from this website. Daily FX highly recommends that before making a decision, the reader collects several opinions related to the decision and verifies facts from at least several independent sources.

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FX Technical Commentary

Daily Forex Technicals | Written by Easy Forex | Oct 23 08 01:40 GMT |

Euro 1.2765 Initial support at 1.2738 (Oct 22 low) followed by 1.2683 (Nov 3 2006). Initial resistance is now located at 1.3078 (Oct 22 high) at followed by 1.3359 (Oct 21 high). Yen 97.60 Initial support is located at 96.85 (Mar 18 low) followed by 95.76 (Mar 17 low). Initial resistance is now at 100.57 (Oct 22 high) followed by 102.41 (Oct 20 high). Pound 1.6225 Initial support at 1.6203 (Oct 22 low) followed by 1.6100 (Sep 17, 2003 low). Initial resistance is now at 1.6717 (Oct 22 low) followed by 1.7168 (Oct 21 high). Australian Dollar 0.6620 Initial support at 0.6540 (76.4% retrace 0.7239-.6330) followed by the 0.6496 (Oct 16 low). Initial resistance is now at 0.7076 (Oct 15 high) followed by 0.7239 (Oct 14 high). Gold 725 Initial support at 721 (Oct 4, 2007 low) followed by 700 (Key Level). Initial resistance is now at 736.8 (Sept 11 low) followed by 775.75 (Oct 22 high). Currency Sup 2 Sup 1 Spot Res 1 Res 2 EUR/USD 1.2683 1.2738 1.2765 1.3078 1.3359 USD/JPY 95.76 96.85 97.60 100.57 102.41 GBP/USD 1.6100 1.6203 1.6225 1.6717 1.7198 AUD/USD 0.6496 0.6540 0.6620 0.7076 0.7239 XAU/USD 700.00 721.00 725.00 736.00 775.75 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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Daily Technical Analysis

Daily Forex Technicals | Written by FX Instructor | Oct 23 08 01:45 GMT |

EURUSD Outlook The EURUSD continued it's bearish momentum yesterday. The pair hit my short target at 1.2875, even further, bottomed at 1.2737 and closed at 1.2826. This is the lowest price of the Euro since November 2006 (See the chart) at 1.2681. Monthly CCI study show that CCI just cross -100 line down, suggesting a potential bearish continuation and could be a further bearish scenario towards 1.2139 which is 50 % Fibonacci retracement from 0.8225 to 1.6038. Immediate resistance is seen at 1.2875 followed by 1.2942. EURUSD Daily Supports and Resistances: S1= 1.2683 S2= 1.2540 S3= 1.2343 R1= 1.3023 R2= 1.3220 R3= 1.3363 GBPUSD Outlook The GBPUSD also continued it's bearish momentum yesterday. After broke the main support level at 1.6543 the pair bottomed at 1.6134 and closed at 1.6220. My model is short targeting 1.5933. CCI in oversold area and heading up suggesting a potential upside correction testing 1.6340 resistance level. GBPUSD Daily Supports and Resistances: S1= 1.5997 S2= 1.5774 S3= 1.5415 R1= 1.6579 R2= 1.6938 R3= 1.7161 USDJPY Outlook The USDJPY continued it's bearish momentum yesterday. The pair bottomed at 97.21 and closed at 97.97. The current bearish momentum should open the door towards 95.73 as the next bearish target. Immediate resistance is seen at 98.30. CCI in oversold area and heading up on 4h chart so watch out for minor upside corrections. USDJPY Daily Supports and Resistances: S1= 96.60 S2= 95.23 S3= 93.25 R1= 99.95 R2= 101.93 R3= 103.30 USDCHF Outlook The USDCHF continued it's bullish momentum yesterday. The pair topped at 1.1710 and closed at 1.1644. My model goes long targeting 1.1855. CCI just cross 100 line down on 4h chart suggesting a potential bearish correction testing 1.1580 and 1.1540 support levels. USDCHF Daily Supports and Resistances: S1= 1.1529 S2= 1.1414 S3= 1.1324 R1= 1.1734 R2= 1.1824 R3= 1.1939 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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Japan's September Merchandise Trade Balance: Summary

By Minh Bui

Oct. 23 (Bloomberg) -- Following is a summary of Japan's merchandise trade balance from the Ministry of Finance in Tokyo.

===============================================================================
Sept. Aug. July June May April March
2008 2008 2008 2008 2008 2008 2008
===============================================================================
-----------------Not Seasonally Adjusted Yen Level-----------------
Balance 95.1 -327.6 85.5 121.9 357.8 475.2 1,109.0
3-mo. avg -49.0 -40.1 188.4 318.3 647.3 849.2 660.8
Exports 7,367.8 7,053.6 7,628.7 7,153.7 6,809.0 6,891.4 7,682.5
Imports 7,272.7 7,381.2 7,543.2 7,031.9 6,451.2 6,416.2 6,573.6
--------------------Year-on-Year Percent Change--------------------
Balance -94.1% n/a -87.5% -90.2% -9.5% -47.4% -30.8%
Exports 1.5% 0.3% 8.0% -1.8% 3.7% 3.9% 2.3%
Imports 28.8% 17.3% 18.2% 16.4% 4.5% 12.0% 11.2%
---------------------Three-Month Percent Change--------------------
Balance -115.4% -106.2% -77.8% -51.8% 11.6% 63.1% -25.2%
Exports 5.7% 2.1% 0.2% -1.0% 2.7% 2.1% -5.1%
===============================================================================
Sept. Aug. July June May April March
2008 2008 2008 2008 2008 2008 2008
===============================================================================
Imports 11.5% 12.9% 10.7% 4.3% 1.9% -2.8% -2.4%
-------------------Seasonally Adjusted Yen Level-------------------
Balance -33.0 -155.5 135.0 86.0 500.3 596.0 654.2
3-mo. avg -17.8 21.8 240.4 394.1 583.5 617.4 698.1
Exports 7,175.4 7,271.2 7,340.4 7,231.7 7,178.7 6,914.3 7,131.1
Imports 7,208.3 7,426.6 7,205.4 7,145.7 6,678.4 6,318.3 6,476.9
-------------------Month-on-Month Percent Change-------------------
Balance -78.8% -215.2% 57.0% -82.8% -16.1% -8.9% 8.6%
Exports -1.3% -0.9% 1.5% 0.7% 3.8% -3.0% 1.0%
Imports -2.9% 3.1% 0.8% 7.0% 5.7% -2.4% 0.3%
---------------------Three-Month Percent Change--------------------
Balance -104.5% -96.3% -61.1% -43.5% -13.9% -18.0% -14.9%
Exports 2.2% 2.9% 3.1% -0.6% -1.3% -2.3% -0.3%
Imports 8.4% 11.8% 9.2% 4.1% 0.0% -0.5% 1.6%
===============================================================================

NOTE: Levels are in billions of yen. Three-month percentage changes are calculated as the three-month average change from the prior three- month average.

SOURCE: Ministry of Finance

To contact the reporter of this story: Minh Bui in Tokyo at mbui@bloomberg.net



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Global Recession Concern Spurs Governments to Boost Spending

By Simon Kennedy

Oct. 23 (Bloomberg) -- After easing the financial-market panic by committing trillions of dollars to shore up their banking systems, governments are broadening their focus to buffering its economic aftershocks.

U.S. lawmakers are moving toward the second fiscal stimulus bill this year and Japanese Prime Minister Taro Aso is set to cut income taxes. In Europe, Britain's Gordon Brown plans to spend more on schools, Italy's Silvio Berlusconi looks to enact tax breaks for manufacturers and Angela Merkel of Germany mulls tax rebates. Emerging-market countries from China to Thailand are also lining up new initiatives.

``Having taken action on the banking system, we must take action on the global recession,'' Prime Minister Brown told U.K. lawmakers yesterday. ``No country can insulate itself.''

Politicians are acknowledging the worst still lies ahead for their economies and their own electoral fortunes unless they act to cushion growth. World leaders will meet in the U.S. on Nov. 15 to review progress in combating the financial crisis and how to avoid a repeat of it.

The cost of borrowing money among banks has fallen after authorities in the U.S. and Europe acted to take stakes in their biggest banks as global stocks plunged and lending seized up. The London interbank offered rate, which banks charge each other for lending dollars overnight, yesterday fell to 1.12 percent, the lowest since June 2004. It reached a record 6.88 percent on Sept. 30. The three-month rate for dollars dropped for an eighth day.

`Meltdown' Averted

``A global meltdown has been averted and governments, while implementing their respective rescue plans, should now turn their attention to the economy and limit the effects of a global recession,'' said Geoffrey Yu, a London-based currency strategist at UBS AG.

Tensions are easing too late to prevent companies and consumers from retrenching. Economists at Deutsche Bank AG expect the Group of Seven economies to contract 1.1 percent next year, the worst since the Great Depression. Even with emerging markets lending support, they predict the weakest global growth since the 1980s.

``As growth slumps, fiscal policy should turn sharply expansionary,'' said Thomas Mayer, Deutsche Bank's co-chief economist in London.

U.S. lawmakers are devising new spending plans after Federal Reserve Chairman Ben S. Bernanke endorsed the idea on Oct. 20 and the Bush administration dropped its opposition. The new push will aim to extend jobless benefits, fund infrastructure projects and help cash-strapped regional governments, according to House Budget Committee Chairman John Spratt.

Fading Fillip

The effect of measures totaling $168 billion that U.S. lawmakers passed in February has faded after they gave the economy a fillip in the second quarter.

Aso, with an election nearing, will next week unveil the government's second stimulus program since August. The plan will probably include income-tax cuts, deductions for people with home loans and an extension of breaks on capital gains, say economists.

European governments may bend their own rules that cap budget deficits in a bid to save their economies.

Brown's U.K. government will next month step up spending on housing, energy and small businesses, while bringing forward construction projects on schools and hospitals, say ministers including U.K. Chancellor of the Exchequer Alistair Darling.

Italian Prime Minister Berlusconi's government is indicating it will enact tax breaks for carmakers and appliance manufacturers. German Chancellor Merkel, who had focused on returning her budget to balance, is considering a 15 billion-euro ($19.3 billion) package of tax rebates.

China Tax Cuts

Emerging markets, the growth engines of the global economy, are also looking for remedies to fading expansions.

China's State Council on Oct. 21 cut taxes for exporters and approved construction programs including new expressways and hydro-electric power stations. Thailand's Deputy Prime Minister Olarn Chaipravat and Jun Kwang Woo, chairman of South Korea's Financial Services Committee, said in separate interviews on Oct. 21 that their governments may ease fiscal policy.

Governments may prove more powerful than central bankers in the current environment, said Julian Jessop, chief international economist at Capital Economics Ltd. Lower interest rates are less effective when the financial system is frozen and have a lagging effect at the best of times, he said.

Fewer Obstacles

Governments also have fewer obstacles than usual, Jessop said. Public borrowing is unlikely to ``crowd out'' other spending given that consumers and companies are cutting back, while the inflationary byproduct of budget deficits will offset deflationary forces such as cheaper fuel and rising unemployment, he said.

``The greater use of discretionary fiscal policy will be an increasingly important global theme over the coming year,'' said Jessop, a former U.K. Treasury economist.

There are some barriers to how far governments can go, and in the longer term investors may punish those running the largest budget deficits, said Robert Lind, chief economist at ABN Amro NV. He calculates that among rich countries Finland, Sweden, Luxembourg and New Zealand have the greatest capacity to spend, while the U.S., U.K. and Japan have the least.

The U.K. this week posted its biggest six-month budget deficit since World War II, while the annual deficit in the U.S. could exceed $1 trillion for the first time. In contrast, economies which have enjoyed commodity booms such as Australia or China have budget surpluses and currency reserves to tap.

For now, Lind said governments are rightly invoking the spirit of economist John Maynard Keynes, who died in 1946 after a career advocating activist government as the best solution to slumps such as the Great Depression.

``More government intervention should help to contain the severity of the economic downturn,'' said Lind. ``We are all Keynesians now.''

To contact the reporter on this story: Simon Kennedy in Paris at Skennedy4@bloomberg.net



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South Korean Growth Probably Slowed, Stoking Recession Concern

By William Sim

Oct. 23 (Bloomberg) -- South Korea's economy probably grew at the weakest pace in four years last quarter, stoking concern a recession is looming as consumers cut spending and the global downturn erodes export demand.

Gross domestic product rose 0.6 percent from the previous quarter, when it advanced 0.8 percent, according to the median estimate of 16 economists surveyed by Bloomberg News. The report is due at 8 a.m. in Seoul tomorrow.

The won slumped 32 percent this year, the region's worst performer, and the stock index tumbled to the lowest since 2005 as the global credit crisis stifles economic growth, threatening recessions in the U.S., Europe and parts of Asia. South Korean manufacturers and retailers are cutting workers as demand eases and builders are reeling under the largest backlog of unsold homes in a decade.

``South Korea's economy is definitely heading down,'' said Daniel Soh, a regional economist at Forecast Pte in Singapore. ``The construction industry is a major worry. The economy will slow into a recession; it's happening all over the world.''

Economic growth cooled to 3.7 percent last quarter from a year earlier, the weakest since 2005, according to the survey.

South Korea this week pledged $130 billion, equivalent to 14 percent of GDP, to support lenders as the credit crunch saps local banks' access to foreign funds. The government also said it will spend as much as 8 trillion won ($6 billion) to shore up the property industry, including buying land and unsold homes.

Rate Cuts

The flagging economy, currently in its 10th year of expansion, reinforces expectations the central bank will cut borrowing costs further. The Bank of Korea lowered the benchmark rate to 5 percent on Oct. 9, the first reduction in four years.

Korean President Lee Myung Bak said this week that the current global financial meltdown is more severe than the currency crisis that swept the region a decade ago.

Still, the financial-aid plan, coupled with the government's relatively low debt and ample foreign reserves, may help South Korea avert a repeat of 1997 when it needed an emergency $57 billion bailout from the International Monetary Fund, the three main ratings companies signaled this week.

Moody's Investors Service and Fitch Ratings affirmed South Korea's sovereign credit ratings on Oct. 21. Standard & Poor's, which last week sparked the won's biggest one-day drop since 1997 by placing the nation's five biggest banks on review for a rating cut, said the government's package is more ``swift and broad'' than expected.

`Provide a Backstop'

Kwon Goohoon, an economist at Goldman Sachs Group Inc. expects South Korea's economy will avoid a recession as lower interest rates and extra government spending help shore up domestic demand and as the won's slump aids exporters.

``We take comfort from the government's action to provide a backstop to the economy,'' Kwon said. ``The government has been running budget surpluses for eight years, so it has the capacity and willingness to use fiscal and monetary flexibility to help limit downside risks.''

South Korea's debt ratio is close to the lowest among major economies, said the Organization for Economic Cooperation and Development. The government's financial liabilities stood at 28 percent of GDP in 2006, compared with Japan's 180 percent and 62 percent in the U.S., according to the OECD Web site.

The nation's $240 billion in foreign reserves are the world's sixth-biggest holdings. South Korea on Oct. 19 agreed to give lenders access to $30 billion in U.S. dollars and guarantee $100 billion of foreign-currency debt.

`Better Equipped'

``We are a lot better equipped than 10 years ago,'' Jun Kwang Woo, chairman of the Financial Services Commission, said in an interview this week. ``We certainly have the right kind of support mechanism to be used whenever it is needed.''

Growth is cooling across Asia, where China's expansion slowed to the weakest in five years last quarter, Japan's economy shrank in the second quarter and Singapore tumbled into a recession.

Posco, Asia's biggest maker of stainless steel, said this week it will slash planned output by about a third this quarter and rival South Korean steelmakers may also cut production to cope with moderating demand.

The following table shows estimates for GDP from the previous quarter and from a year earlier, as well as predictions for 2008 and 2009 growth.

                                    QoQ%   YoY%   2008   2009
-------------------------------------------------------------
Median                              0.6%   3.7%   4.2%   3.5%
Average                             0.5%   3.7%   4.2%   3.2%
High Forecast                       0.7%   4.2%   4.5%   4.2%
Low Forecast                       -0.1%   3.1%   3.4%   2.0%
Number of Forecasts                  16     19
=============================================================
Action Economics                    0.6%   3.8%
Capital Economics                   0.3%   3.6%   4.0%   2.5%
CFC Seymour                        -0.1%   3.1%    N/A    N/A
Citi                                0.6%   3.9%   4.2%   2.2%
Credit Agricole Indosuez             N/A    N/A   4.0%   3.0%
Daewoo Securities                   0.7%   3.8%   4.3%    N/A
DBS Group                           0.7%   4.0%   4.4%   3.5%
Forecast Pte Ltd                     N/A   4.2%    N/A    N/A
Good Morning Shinhan Secs           0.6%   3.8%   4.3%   3.7%
HI Investment & Securities          0.6%   3.6%   4.2%   3.6%
HMC Investment Securities           0.3%   3.6%   4.2%   3.1%
HSBC                                 N/A   3.7%   3.4%   2.0%
Hyundai Securities                  0.5%   3.4%   4.3%   4.0%
ING Bank                            0.6%   3.9%    N/A    N/A
Mirae Asset Securities              0.2%   3.4%   4.1%   3.2%
Moody's Economy.com                 0.6%   3.7%   3.9%   3.6%
Samsung Securities                  0.2%   3.6%   4.3%   3.5%
SC First Bank                        N/A   3.8%   4.5%   3.9%
Taurus Investment& Securities       0.6%   3.9%   4.4%   4.2%
Thomson IFR                         0.3%   3.6%   4.0%   3.5%
=============================================================

To contact the reporter on this story: William Sim in Seoul at wsim2@bloomberg.net.



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Trichet May Need to Prove Inflation Credentials After Rate Cut

By Ben Sills

Oct. 23 (Bloomberg) -- European Central Bank President Jean- Claude Trichet may need to show he's still inflation fighter-in- chief after price expectations soared in the wake of the bank's Oct. 8 interest-rate reduction.

Economists at Deutsche Bank AG say the ECB will slash the benchmark rate to a record low of 1.5 percent by the middle of next year from the current 3.75 percent as the euro-region economy heads into a recession. Other economists say that underestimates Trichet's commitment to combating inflation.

``We're a bit more cautious,'' said Kenneth Broux, an economist at Lloyds TSB Plc in London, who sees the key rate dropping to 3 percent. The financial crisis ``hasn't solved the inflation problem.''

The bank ignored inflation at almost twice its 2 percent limit when it joined the global round of rate cuts. The five- year/five-year forward breakeven rate, the bank's preferred gauge of the medium-term inflation outlook, has jumped 14 basis points since the cut, to 2.5 percent. It wiped out almost half the decline that followed the ECB's initial October decision to keep the main rate at a seven-year high of 4.25 percent.

Trichet described the first rate reduction in five years as a ``signal of confidence'' to markets. The move, which followed the worst stock-market drops since the 1987 crash, marked a shift in the bank's focus toward economic growth and away from its usual preoccupation with prices, said Dario Perkins, senior economist at ABN Amro Holding NV in London.

`Different Objective'

``It's quite clear that they have changed,'' said Perkins. ``All the talk was about confidence and that's a different objective from what they had at the beginning of October.''

The ECB raised rates as recently as July.

Investors expect the ECB to lower rates by at least a quarter point on Nov. 6 and a further half point to 3 percent by February as the credit crunch hits Europe, Eonia forward contracts show. Deutsche Bank says the economy will shrink 1.4 percent in 2009.

The financial crisis is fueling a debate that's smoldered since the ECB was set up in 1998 on how the central bank should interpret its mandate. While the Maastricht Treaty of 1992 sets out price stability as the ECB's ``primary objective,'' the bank also has scope to support the European Union's ``general economic policies'' once inflation is under control.

``The crisis is taking central banks away from their traditional mandate,'' said David Bowers, a consultant with Merrill Lynch & Co. in London. ``The fact that the ECB has been forced to move comes pretty close to a change in their brief.''

Political Pressure

French President Nicolas Sarkozy and predecessor Jacques Chirac have led the push for the central bank to do more for growth. Even former Spanish central bank governor Luis Angel Rojo has broken with central banking convention and criticized his former colleagues, saying in an Oct. 20 interview that price stability ``shouldn't be their only objective.''

``In certain situations, including the present one, they haven't given enough attention to other problems such as the decline in economic activity,'' Rojo said.

The ECB's rate cut came as Europe's benchmark index, the Dow Jones Stoxx 600, suffered its worst week on record, dropping 22 percent. The euro has plunged 13 percent against the dollar in a month, to a two-year low yesterday, as concerns mount that the euro-region economy is slumping.

Trichet may be more comfortable with faster inflation until the current crisis abates even if he doesn't admit it, said Julian Callow, chief European economist at Barclays Capital in London. The danger is that an extended economic slump would push down prices and wages just as banks restrain the flow of credit, increasing the risk of a deflationary spiral.

Prudent Approach

``It's prudent to allow for those risks in setting the rate and therefore this implicitly means you should accept a higher inflation rate than otherwise,'' said Callow. ``The ECB is tilting this way for sure.''

Trichet denies the bank has taken its eye off inflation. He argued after the rate cut that the financial crisis eased the inflation outlook, giving the ECB room to act.

``There has been a materialization of the downside risks to growth and we have to take that into consideration in all respects, and particularly as regards the influence that it has on the upside risks for price stability,'' Trichet said in New York on Oct. 14. In an interview on French radio on Oct. 19, he described the 15-nation euro area as being in a ``very, very important growth slowdown.''

``Whether that means inflation is suddenly going to fall enough is highly doubtful,'' said Broux. ``Unemployment is the lowest in a generation.''

Demanding Higher Wages

While oil prices have halved in the past three months and inflation slowed to 3.6 percent in September, workers are demanding compensation for higher costs.

Germany's IG Metall labor union is seeking an 8 percent pay increase, the largest in 16 years, and workers at Ireland's Electricity Supply Board last month demanded 11.3 percent.

Cutting borrowing costs too much also risks repeating the mistake made by the ECB and the Federal Reserve earlier this decade, when rate reductions helped fuel asset-price inflation, said Gilles Moec, an economist at Bank of America in London.

``The challenge of 2009 is to cut rates sufficiently to avoid a catastrophe, but without feeding the next bubble,'' he said. ``Political pressure will be extreme, so they will have to fight.''

To contact the reporter on this story: Ben Sills in Madrid at bsills@bloomberg.net



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