Yen Falls From Strongest Level Since 2002 as Stocks Advance

By Stanley White and Ye Xie

Oct. 24 (Bloomberg) -- The yen fell from the highest level against the euro since 2002 on speculation a rebound in U.S. stocks will slow sales of higher-yielding assets funded by low- cost loans in Japan's currency.

The dollar rose for the first day in four against the yen before data that may show a revival in existing home sales as U.S. lawmakers press for measures to curb mortgage foreclosures. The pound fell against the dollar and the euro before a government report that may show U.K. economic growth slowed.

``There could be more yen selling orders in the market,'' said Tsutomu Soma, a bond and currency dealer at Okasan Securities Co. in Tokyo. ``U.S. homeowners are hurting, so any moves to help them are also positive for dollar sentiment.''

The yen traded at 126.14 per euro at 8:08 a.m. in Tokyo from 125.89 late yesterday in New York, when it touched 123.14, the strongest level since December 2002. The dollar rose to 97.63 yen from 97.31. The dollar traded at $1.2923 per euro after reaching $1.2728, the strongest level since November 2006. The yen may move between 125.65 and 126.75 per euro today, Soma forecast.

The pound fell to $1.6210 from $1.6230. It touched $1.6042 yesterday, the weakest since September 2003. It slid as much as 3.4 percent on Oct. 22, the biggest intraday decline since September 1992, when investor George Soros drove the currency out of Europe's system of linked exchange rates.

U.K. Economy

U.K. gross domestic product expanded 0.5 percent in the third quarter compared with a year ago, slower than the 1.5 percent growth in the previous quarter, the government may say today, according to a Bloomberg survey.

The Standard & Poor's 500 Index rose 1.3 percent yesterday, after falling as much as 4.3 percent, as a rebound in oil prices boosted shares of energy companies.

U.S. existing home sales rose 0.8 percent in September after a 2.2 percent decline in the previous month, data may show today, according to a separate survey. Federal Deposit Insurance Corp. Chairman Sheila Bair urged Congress to use loan guarantees to make it easier for homeowners to pay their mortgages.

The euro has fallen 20 percent versus the dollar since touching the all-time high of $1.6038 on July 15. The European economy may be headed for a recession that could last two to three years, Finland's Finance Minister Jyrki Katainen said on Oct. 22 in an interview on Bloomberg Television.

Net selling of European stocks among institutional investors has been three times higher than average over the past year, and foreign investors account for most of the sales, according to Samarjit Shankar, director of strategy for the global markets group in Boston at Bank of New York Mellon, the world's largest custodial bank with more than $23 trillion in assets under administration.

``One thing that stands out this week is huge European equity market outflows,'' said Shankar. ``Net selling is adding to pressure on the euro. Growth in the euro zone is deteriorating very fast.''

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

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Oil Extends Gains Before OPEC Meets to Discuss Production Cuts

By Mark Shenk and Samantha Zee

Oct. 24 (Bloomberg) -- Crude oil rose for a second day on speculation OPEC will agree to cut production to stem a slump of more than 50 percent in prices from July's record.

Venezuela and Iran are among members to have called for a cut at today's meeting in Vienna. OPEC President Chakib Khelil said there is a consensus to trim output without agreement on the size of the reduction. Oil is poised to drop for a fourth week, the longest losing streak since January last year.

``If OPEC makes a cut of 1 to 2 million barrels, prices should firm up and move higher in the short term,'' said Gene McGillian, an analyst at Tradition Energy in Stamford, Connecticut. ``Unless there is something huge announced, the market will eventually start moving lower again because of the weak economy.''

Crude oil for December delivery rose $1.44, or 2.1 percent, to $69.28 a barrel at 8 a.m. Singapore time on the New York Mercantile Exchange. Prices are down 20 percent from a year ago and 3.6 percent this week. Yesterday, crude rose $1.09, or 1.6 percent, to $67.84 a barrel in New York.

Oil has dropped from the record $147.27 a barrel touched July 11 because of concerns slowing economic growth will curb demand. China, the world's fastest-growing energy consumer, said Oct. 20 its economy expanded at 9 percent in the third quarter, the slowest pace in five years. Concern a deepening global slump will damp profits has pushed the MSCI World Index 4 percent lower this week.

`Bear Market'

``Prices have fallen a great deal, so a gain should be expected,'' said Peter Beutel, president of energy consultant Cameron Hanover Inc. in New Canaan, Connecticut. ``I think we are in a bear market where every rally will be followed by a move to a new low.''

Oil has lost its appeal among investors as a hedge against inflation, along with other commodities, as the U.S. dollar advances. The euro has fallen 20 percent versus the dollar since July 15.

Prices dipped during trading yesterday after Saudi Arabian Oil Minister Ali al-Naimi declined to express his support for a possible cut, on his arrival in Vienna. Saudi Arabia and Iran are the Organization of Petroleum Exporting Countries' two biggest producers.

``Who said anything about a cut?'' al-Naimi said when asked whether he supports the possibility of the group agreeing to reduce output. ``Prices will be determined by the market.''

`Balance' the Market

OPEC should cut production by 2 million barrels a day to stem the slump in prices and ``balance'' the market, Iranian Oil Minister Gholamhossein Nozari said earlier.

OPEC needs to lower production to restore equilibrium after the exit of speculators from the market hastened oil's drop from July's record, said Khelil, who is also Algeria's oil minister.

The group has asked Russia and other non-OPEC suppliers to trim output, he said. He wasn't confident Russia would respond, he added.

``If the Saudis don't play ball, it doesn't matter what OPEC decides,'' said Christopher Edmonds, the managing principal of FIG Partners Energy Research & Capital Group in Atlanta. ``Without Saudi support and compliance with a production cut, the cartel doesn't even need to meet. It will have an immaterial impact on production and price.''

The group needs to avoid a buildup in crude inventories that could cause a collapse in oil prices next year, Edmonds said. OPEC should evaluate whether a further cut is needed when it meets in Algeria in December, Venezuelan Oil Minister Rafael Ramirez said yesterday.

The United Arab Emirates, OPEC's third-biggest producer, is ``very concerned about the steep decline'' in prices, Oil Minister Mohamed al-Hamli said.

OPEC leaders are scheduled to meet in Vienna today at 9 a.m. local time.

The last time OPEC lowered quotas was at a December 2006 meeting in Abuja, Nigeria. The 500,000 barrel-a-day cut took effect in February 2007, expanding an earlier reduction agreed to in October. The cuts were reversed later in 2007 as prices rose.

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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Brazil to Pump $50 Billion in Currency Market to Shore Up Real

By Andre Soliani and Jamie McGee

Oct. 23 (Bloomberg) -- Brazil's central bank will pump the equivalent of $50 billion into currency markets, its boldest move yet to stem a two-month, 28 percent tumble in the real that has saddled companies with losses and stoked inflation.

The real soared after the announcement, climbing 5.2 percent and erasing an initial slump of as much as 5.8 percent. Authorities said the injection will be in the form of contracts that will allow investors to protect against further declines in the Brazilian currency.

Today's plan responds to concerns that the real's tumble will bankrupt companies in Latin America's biggest economy after some of the biggest exporters reported more than 5 billion reais ($2.22 billion) in derivatives losses. Those worries stem in part from the collapse in Mexico of retailer Controladora Comercial Mexicana SAB this month following a rout in the peso.

Brazil has ``been aggressive, ahead of the curve compared to other central banks,'' said Gerardo Margolis, a vice president for emerging markets at TD Securities Inc. in Toronto. He said the $50 billion swap sale plan will help shore up the real for at least a few days. ``It's a huge number.''

Policy makers injected the equivalent of $22.9 billion into the foreign exchange market from Oct. 8 to Oct. 20 in the form of swap sales, dollar loans and outright dollar sales, central bank President Henrique Meirelles told a congressional committee in Brasilia on Oct. 21.

Brazilian companies may lose as much as $10 billion from currency derivatives after the real's tumble, Banco Itau Holding Financeira SA economist Tomas Malaga said today.

The Brazilian real's losses had quickened this week. It sank 11 percent the past two days amid concern that the global financial crisis will drive neighboring Argentina to default for the second time this decade.

`Forceful Approach'

The central bank followed up today's announcement by selling $2.3 billion worth of swap contracts and buying an unspecified amount of reais. The bank said in a statement it will hold further swap auctions to meet ``liquidity needs'' in the market. The swap contracts support the real by providing investors a hedge against its decline.

``The central bank is taking a forceful approach,'' said Vladimir Caramaschi, chief strategist at Credit Agricole do Brasil. The swap offer ``is another exit for those who need to cancel hedging positions.''

The real rose as much as 6.2 percent to 2.24 per dollar today. It traded at 2.2608 at 4:29 p.m. New York time, from 2.379 yesterday. The real plunged early in the day, falling to as low as 2.526 per dollar after Standard & Poor's said it may cut Russia's debt rating.

Commodities Slump

``You have Argentina, the Russia downgrade,'' said Flavia Cattan-Naslausky, an interest-rate and currency strategist at Royal Bank of Scotland in Greenwich, Connecticut. She said she expects Brazil to pull out of the crisis because the country has ``deep'' money markets and growing investment.

The real has sunk 31 percent from a nine-year high of 1.5545 reached on Aug. 1 as the global crisis has driven down prices on the country's commodity exports and eroded demand for higher- yielding, emerging-market assets. Only the South African rand, down 35 percent, has fallen more over that time.

Brazilian prices, as measured by the IGP-10 index of wholesale, consumer and construction costs, rose 0.78 percent in the month ended Oct. 10 after declining 0.42 the previous month.

Brazil had foreign currency outflows of $3.39 billion between Oct. 1 and Oct. 21, central bank economist Altamir Lopes told reporters today in Brasilia. In September, before the global crisis deepened, the country received $2.8 billion in inflows from trade and investments.

Tax Scrapped

President Luiz Inacio Lula da Silva, seeking to reverse those outflows, eliminated today a financial tax on foreign investors' purchases of fixed-income securities and loans. Lula scrapped the tax, known as IOF, of 1.5 percent on foreign investors' purchases of some financial products and of 0.38 percent on foreign-currency loans, according to the Finance Ministry.

``This makes a lot of sense,'' Cattan-Naslausky said. ``No one likes capital controls.''

Brazil is ramping up interventions to prop up the real after building up a record $208.7 billion of reserves during a six-year commodities rally. The UBS Bloomberg CMCI Commodity Index has fallen 43 percent since peaking on July 2.

While the real's drop has bolstered the government's finances because it holds more foreign currency than it owes, some companies have been squeezed.

Companies ranging from pulp maker Aracruz Celulose SA to food processor Sadia SA and cement maker Grupo Votorantim announced currency losses of more than 5 billion reais ($2.19 billion) from hedges and bets that the real would extend a four- year rally.

`Stress'

The Itau forecast for as much as $10 billion in companies' currency losses represents a 23 percent loss on about $44 billion at risk in currency derivatives among Brazil companies, said Malaga, chief economist for the second-largest non-government bank. Former central bank deputy governor Paulo Vieira da Cunha last week said potential losses on the contracts may be a combined $27 billion.

``Nobody would imagine the currency could reach such a level,'' Malaga said in a phone interview. ``This problem will still cause stress for some individual companies, but we are not talking about the risk of a systemic crisis.''

To contact the reporter on this story: Andre Soliani in Brasilia at asoliani@bloomberg.net

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Greenspan Concedes to `Flaw' in His Market Ideology

By Steve Matthews and Scott Lanman

Oct. 23 (Bloomberg) -- Former Federal Reserve Chairman Alan Greenspan said a ``once-in-a-century credit tsunami'' has engulfed financial markets and conceded his free-market ideology shunning regulation was flawed.

``Yes, I found a flaw,'' Greenspan said in response to grilling from the House Committee on Oversight and Government Reform. ``I was shocked because I'd been going for 40 years or more with very considerable evidence that it was working exceptionally well.'' Greenspan added he was ``partially'' wrong for opposing the regulation of derivatives.

Greenspan's contrition came after lawmakers and Fed watchers increasingly blamed the former Fed chairman for helping cause the crisis with lax oversight of the housing boom and derivatives markets. Normally afforded deference by Congress, he endured almost four hours of questions from lawmakers less than two weeks before a national election.

``Greenspan is finally taking some responsibility for his actions,'' said Paul Kasriel, director of economic research at Northern Trust Co. in Chicago and a former Fed official. ``The damage has been done. His reputation has definitely been tarnished.''

Greenspan, responding to questions, said only ``onerous'' regulation would have prevented the financial crisis. Stifling rules would have suppressed growth and hurt Americans' standards of living, he said.

Not Infallible

``We have to do our best but not expect infallibility or omniscience,' he said.

Part of the problem was that the Fed's ability to forecast the economy's trajectory is an inexact science, he said.

``If we are right 60 percent of the time in forecasting, we are doing exceptionally well; that means we are wrong 40 percent of the time,'' Greenspan said. ``Forecasting never gets to the point where it is 100 percent accurate.''

The admission that free markets have their faults was a shift for the former Fed chairman who declared in a May 2005 speech that ``private regulation generally has proved far better at constraining excessive risk-taking than has government regulation.''

Committee Chairman Henry Waxman, a California Democrat, said today that Greenspan had ``the authority to prevent irresponsible lending practices that led to the subprime mortgage crisis.''

`Paying the Price'

``You were advised to do so by many others,'' he told the man hailed in the 1990s as the ``Maestro'' of the global financial system and awarded a knighthood in 2002. ``And now our whole economy is paying the price.''

Greenspan's devotion to free markets was nurtured in part by his association with Ayn Rand, the libertarian novelist and philosopher who espoused laissez-faire capitalism. He met Rand in the 1950s, becoming part of her inner circle of followers meeting regularly in her Manhattan apartment.

``Greenspan in a very, very kind of unwise, left-brain way, imputed pure rationality to markets,'' James Grant, editor of Grant's Interest Rate Observer, said in an interview on ``Night Talk'' with Mike Schneider to be broadcast later today on Bloomberg Television. ``They are just as rational and just as efficient as the people that operated in them.''

Waxman echoed that sentiment to Greenspan: ``The mantra became government regulation is wrong. The market is infallible.''

Gramlich's Warnings

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.

Questioned about those warnings, Greenspan said ``Governor Gramlich said to me that he had problems'' and that he left the meeting expecting a Fed subcommittee dealing with consumer and community affairs to present recommendations, which didn't occur. ``I presumed at the time that essentially the subcommittee didn't think it rose to the higher level'' requiring action, Greenspan said.

Responding to criticism that he was too ideological, Greenspan said he sought as chairman to abide by laws passed by Congress, ``not my own predilections.''

He later added that he couldn't respond to every warning. ``There are always a lot of people raising issues, and half the time they're wrong.''

Regulatory Actions

Greenspan pointed out that he voted for every regulatory action the Fed moved on, drawing a rebuke from Waxman. ``On the other hand, you didn't get to vote on regulations that you didn't put before the Federal Reserve board, even though you had the legal authority for those regulations.''

Firms that bundle loans into securities for sale should be required to keep part of those securities, Greenspan said in prepared testimony. Other rules should address fraud and settlement of trades, he said.

Greenspan opposed increasing financial supervision as Fed chairman from August 1987 to January 2006. Policy makers are now struggling to contain a financial crisis marked by record foreclosures, falling asset prices and almost $660 billion in writedowns and losses tied to U.S. subprime mortgages.

Greenspan, 82, 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.

Pricing Risk

``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.

Greenspan said the Fed didn't know the size of the subprime mortgage market until late 2005.

Securities and Exchange Commission Chairman Christopher Cox and former Treasury Secretary John Snow also appeared at the House committee hearing.

Snow said the economy is headed down a ``bad, bad path'' and he endorsed consideration of more fiscal stimulus. For the longer term, Snow said the global financial system should be reorganized by focusing on increasing transparency of ``excessive'' leverage to prevent institutions from creating too much risk.

The U.S. needs ``one strong national regulator'' to oversee firms and fix what Snow called ``a fragmented approach'' to regulation.

Addressing the trio that oversaw the U.S. financial markets as the housing bubble developed, Representative John Yarmuth, a Democrat from Kentucky, characterized them as ``three Bill Buckners,'' referring to the Boston Red Sox first baseman whose fielding error some fans blame for the team's loss in the 1986 World Series.

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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Canada Gas Output May Fall 2.7 Percent by 2010, Government Says

By Reg Curren

Oct. 23 (Bloomberg) -- Canada's natural-gas output will probably fall 2.7 percent by 2010 as higher costs and lower prices make it uneconomical to tap new reserves, a government report today showed.

Gas production will fall to 15.9 billion cubic feet a day by 2010 from a predicted 16.3 billion this year, the report from Canada's National Energy Board showed.

Prices for gas traded in New York have plunged 53 percent to $6.438 per million British thermal units from a 30-month high of $13.577 per million Btu reached in July. Gas dropped amid lower demand and increasing inventories. Canada accounts for about 25 percent of combined North American production, the board said.

``Under conditions of such extreme price volatility, future levels of natural gas investment are highly uncertain,'' the board said in its report.

Supplies in the U.S. have gained on new gas production from shale formations in Texas. Fuel use is slowing as a recession looms and a mild summer cut demand from utilities to produce electricity for air conditioners.

U.S. inventories reached 3.347 trillion cubic feet in the week ended Oct. 17, according a U.S. Energy Department supply report today.

The National Energy Board is an agency of Canada's federal government that oversees pipelines and energy exports. The board's duties are similar to those of the U.S. Federal Energy Regulatory Commission.

To contact the reporters on this story: Reg Curren in Calgary at rcurren@bloomberg.net.

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Dynegy Required to Disclose Climate Change Risks

By Karen Freifeld

Oct. 23 (Bloomberg) -- Dynegy Inc., owner of power plants in 11 states, must disclose significant financial risks associated with climate change stemming from its operations under an accord announced by former U.S. Vice President Al Gore and New York Attorney General Andrew Cuomo.

``Investors have a right to know all the material financial risks faced by coal-fired power plants associated with global warming,'' Cuomo said today in a statement. Gore said the deal ``is a key step in the effort to solve the climate crisis.''

Dynegy rose 8.8 percent. The energy company, branded the ``king'' of coal-fired power plants by the National Environmental Trust, recently announced plans to build new units in at least six states in a joint venture with LS Power Group of East Brunswick, New Jersey.

The settlement follows an August agreement with Xcel Energy Inc., which agreed to disclose potential costs tied to climate change. Under today's deal, Dynegy agreed to similar reporting to the U.S. Securities and Exchange Commission.

Cuomo said inquiries were still pending against Dominion Resources Inc., based in Richmond, Virginia; Peabody Energy Corp. of St. Louis; and AES Corp. of Arlington, Virginia, all of which were subpoenaed last year.

Peabody spokesman Vic Svec and AES spokeswoman Meghan Dotter didn't immediately return phone calls seeking comment on Cuomo's statement. Dominion spokesman Mark Lazenby had no immediate comment.

24 Percent

About 24 percent of Houston-based Dynegy's production capacity is fueled by coal, said David Byford, a company spokesman. Coal is more polluting than nuclear, wind, solar or natural-gas-fired power, according to estimates this year.

Dynegy rose 24 cents to $2.96 in New York Stock Exchange composite trading. The company has the capacity to produce about 18,000 megawatts of electricity, enough for more than 14 million average U.S. homes, based on an estimate by the U.S. Energy Department.

Dynegy Chief Executive Officer Bruce Williamson has said electricity buyers, not producers, dictate the types of units being built, choosing coal because it provides for lower costs.

Dynegy's mandated disclosures include an analysis of risks related to present and probable climate-change regulation, legislation and litigation, as well as physical impacts on the environment.

Carbon Strategies

As part of the settlement, Dynegy agreed to disclosures including current carbon emissions and projected increases in emissions from planned coal-fired power plants. The company also must report strategies for cutting its global warming and pollution emissions, and the amount of the expected reductions.

Cuomo said that energy company investors face financial risks as carbon-emitters become subject to increased regulation and lawsuits. ``It's about disclosure,'' Cuomo said at a press conference about the agreement in lower Manhattan.

``What is being announced here by the attorney general today has incredible importance for the environmental crisis,'' Gore said in the statement. ``Investors have a right to the truth so that they can be freed from unnecessary and avoidable risks.''

Byford said the company ``will continue to provide appropriate information to investors about climate change.''

To contact the reporter on this story: Karen Freifeld in New York at kfreifeld@bloomberg.net.

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Areva, Northrop to Build Nuclear Reactor Parts Plant

By [bn:PRSN=1] Jim Polson []

Oct. 23 (Bloomberg) -- Areva SA, the world's largest reactor maker, and Northrop Grumman Corp. will build a $360 million parts factory adjacent to a Virginia shipyard, easing a potential bottleneck for new nuclear plants.

The Areva Newport News joint venture will be the first full-scale U.S. maker of reactors and other massive parts since the 1990s, Tom Christopher, chief executive officer of Paris- based Areva's U.S. unit, said today in an interview. Production may start in 36 months, he said.

Areva is preparing for a global expansion of nuclear power. In the U.S., where no new plants have been built for 35 years, 24 new reactors have been proposed, and Areva has preliminary deals to build at least four of them. Proponents say the plants will add needed power without increasing greenhouse-gas emissions.

``Areva intends to build one-third of all new reactors around the world and at least seven in the U.S.,'' Areva Chief Executive Officer Anne Lauvergeon said today in a joint statement with Los Angeles-based Northrop. ``Areva Newport News is a key step.''

Northrop Grumman is the largest builder of U.S. Navy warships, including the nuclear-powered aircraft carrier Gerald R. Ford, its most expensive vessel. Closely held Lehigh Heavy Forge Corp., based in Bethlehem, Pennsylvania, will make large steel pieces such as reactor vessels, Christopher said.

`Nuclear Renaissance'

``Today is a great day for the future of nuclear energy in America,'' U.S. Senator Pete Domenici, ranking Republican on the Senate Energy and Natural Resources Committee, said today in a statement. ``That these companies are willing to make such a large investment at this time is further evidence that the nuclear renaissance in the U.S. is real.''

U.S.-built reactor parts would cost buyers 20 percent less than those built in France at current dollar-euro exchange rates, Christopher said.

Northrop Grumman fell $1.51 to $44.40 in New York Stock Exchange composite trading. Areva closed unchanged in Paris before reporting that third-quarter sales rose 9 percent to $2.94 billion euros ($3.77 billion) on progress at atomic power plant projects.

Cost Savings

The Newport News factory will use an existing drydock to load 600-ton parts directly aboard ship, saving millions in delivery costs, he said.

``We're going to take orders in the U.S. and around the world,'' Christopher said. ``Whoever comes in first, we will ship to.''

Areva will hold a 67 percent stake in the venture, with Northrop Grumman holding the rest, the companies said in a statement.

Areva competes for nuclear orders with Toshiba Corp.'s Westinghouse Electric Co., and GE Hitachi, a joint venture of General Electric Co. and Hitachi Ltd. Westinghouse and Shaw Group Inc. in August announced plans for a Louisiana factory that will make piping for nuclear plants.

``This is a step in the right direction to re-establish manufacturing capability in this country that can support new nuclear plant construction,'' Adrian Heymer, director of new plant deployment for the Nuclear Energy Institute, a Washington- based industry group, said in an interview today. ``We can expect similar announcements.''

A 2005 report by the U.S. Energy Department concluded that as many as eight reactors could be built between 2010 and 2017 with existing manufacturing capacity. The U.S. Nuclear Regulatory Commission is expecting applications through 2010 to build as many as 34 new units.

The Areva Newport News LLC joint venture will hire skilled labor from Northrop Grumman's Newport News shipyard, Christopher said. The plant is expected to employ 500 workers.

Nuclear Contribution

The factory will make parts for Areva's Evolutionary Power Reactor. Two such plants are under construction, including Western Europe's first new reactor since the world's worst nuclear plant accident at Chernobyl, Ukraine, in 1986.

Nuclear reactors may produce more than 20 percent of global electricity by 2050, up from 16 percent today, as demand for power rises in countries such as China and India, the Organization for Economic Cooperation and Development's Nuclear Energy Agency said in an Oct. 16 report.

Areva makes reactors and large parts such as steam generators, which help transfer heat from the reactor core to power-generating turbines at Chalon/Marcel in France.

``Areva is overloaded today at our existing manufacturing facility,'' Christopher said. ``We'll take the overload from France plus the U.S. markets.''

New Plants

Construction of the Newport News plant will begin in next year's first half, with production starting three years later. Only local building permits are needed, Christopher said.

In June, 41 reactors were being built around the world, with an average construction time of 62 months, the OECD report said.

UniStar Nuclear Energy LLC, Areva's joint venture with Constellation Energy Group Inc., the U.S. nuclear plant operator being acquired by Warren Buffett's MidAmerican Energy Holdings Co., has agreements to build new plants for Constellation in Maryland and New York, as well as in Pennsylvania for utility owner PPL Corp. and in Missouri for utility owner Ameren Corp.

MidAmerican ``strongly'' supports development of new plants by UniStar and is committed to build the Maryland plant, Chief Executive Officer Greg W. Abel said in an Oct. 17 statement.

Areva is building Olkiluoto 3, Finland's fifth nuclear power plant, for utility Teollisuuden Voima Oyj. The project has been plagued by component, construction and organization problems since its start in 2005 and its delivery has been pushed back three years to 2012.

Areva is also building a reactor for Electricite de France SA and won an order to supply two to China.

To contact the reporter on this story: Jim Polson in New York at jpolson@bloomberg.net.

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EnCana Profit Triples on Higher Output, Hedging Gain

By Joe Carroll

Oct. 23 (Bloomberg) -- EnCana Corp., Canada's largest natural-gas producer, said third-quarter profit more than tripled after output increased and energy prices surged.

Net income climbed to $3.55 billion, or $4.73 a share, from $934 million, or $1.24, a year earlier, the Calgary-based company said today in a statement. Excluding such items as a $2 billion gain in the value of hedging contracts that lock in prices, profit was $1.92 a share, 15 cents higher than the average of 15 analyst estimates compiled by Bloomberg.

EnCana was paid 18 percent more than a year earlier, on average, for gas, and its average oil price jumped 85 percent. Crude-oil futures in New York climbed to a record above $147 a barrel in July, and gas futures traded 44 percent higher than in last year's third quarter. EnCana reported a 6.1 percent gain in production. About 83 percent of the company's output is gas.

``Production was definitely higher than what the expectations were,'' said Richard Wyman, an analyst at Canaccord Adams in Calgary who has a ``buy'' rating on EnCana shares. ``The hedges they had in place helped as well.''

EnCana rose C$4.26, or 8.4 percent, to C$55 in Toronto Stock Exchange trading. Before today, the stock had dropped 25 percent this year.

Chief Executive Officer Randy Eresman is increasing gas output from British Columbia to Louisiana. Last month, EnCana began a $3.6 billion refinery expansion with ConocoPhillips to process heavy crude from Alberta's oil sands. A plan to split the company into separate gas and oil businesses was put on hold last week because of turmoil in financial markets.

Divestitures Delayed

EnCana boosted its 2008 capital budget by $900 million, to $7.4 billion, because the credit crisis will delay asset sales that will help fund gas-field acquisitions in Louisiana and Arkansas, according to the statement.

The company pre-sold about 60 percent of its gas production through October 2009 at an average price of $9.15 per thousand cubic feet.

Third-quarter revenue climbed 92 percent to $10.8 billion, EnCana said. Cash and cash equivalents rose to $622 million, a 12 percent increase from Dec. 31.

EnCana shut wells that pump 50 million cubic feet of daily output in Wyoming this month because of a surfeit of supply in the U.S. Rocky Mountains that triggered a drop in prices there, according to the statement. The idled capacity accounts for 1.3 percent of the company's total gas production.

To contact the reporter on this story: Joe Carroll in Chicago at jcarroll8@bloomberg.net.

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Celestica, Microsoft, Western Digital: U.S. Equity Preview

By Lu Wang

Oct. 23 (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 6 p.m. in New York, unless otherwise specified.

Standard & Poor's 500 Index futures expiring in December lost 0.20 point to 915. Dow Jones Industrial Average futures added 217, or 2.5 percent, to 8,774. Nasdaq-100 Index futures slipped 6.25, or 0.5 percent, to 1,247.25.

Celestica Inc. (CLS US) rose 55 cents, or 15 percent, to $4.21. The maker of electronic parts said it expects to earn as much as 24 cents a share in the fourth quarter. Analysts, on average, anticipated profit of 19 cents, according to a Bloomberg survey.

Juniper Networks Inc. (JNPR US) fell 98 cents, or 5.5 percent, to $16.85. The second-largest maker of networking equipment lowered its forecast for 2008 revenue as third-quarter profit missed some analysts' estimates.

Microsoft Corp. (MSFT US) rose 17 cents, or 0.8 percent, to $22.49. The world's largest software maker reported first- quarter profit and sales that beat analysts' estimates as software demand held up amid an economic slowdown.

New York Times Co. (NYT US) fell 40 cents, or 3.7 percent, to $10.30. The newspaper publisher had its debt rating reduced three levels to junk status by Standard & Poor's Corp., which said a likely recession in the U.S. will further crimp the company's revenue.

Western Digital Corp. (WDC US) gained $1.45, or 11 percent, to $14.50. The world's second-largest maker of hard-disk drives said first-quarter profit more than tripled, topping some analysts' estimates, on sales of portable products.

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

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Mexico's Currency Rebounds After Central Bank Buys $1.1 Billion

By Valerie Rota

Oct. 23 (Bloomberg) -- Mexico's currency rallied after the central bank bought $1.1 billion worth of pesos.

The peso rebounded from a record low, snapping a four-day losing streak. Banco de Mexico's purchase at two auctions today added to the $12 billion of pesos it has bought over the past two weeks to stem a rout in the currency.

``The auctions definitely help,'' said Alonso Madero, who oversees 39.5 billion pesos ($2.9 billion) in assets in Mexico City at Actinver SA. ``Still, Banco de Mexico's auctions have been insufficient in fighting the market.''

The peso gained 3.3 percent to 13.4170 per U.S. dollar at 5:24 p.m. New York time, from 13.8790 yesterday. It rose as much as 4.7 percent, its biggest intraday gain since Oct. 13. Earlier the peso touched 14.3017, the weakest level since Bloomberg began tracking the data in 1971.

Mexico's currency maintained gains after senators voted to allow state-owned oil monopoly Petroleos Mexicanos to hire private companies to explore and drill for oil in an effort to reverse declining production. Oil is Mexico's biggest source of dollar flows and provides about 40 percent of government revenue.

Banco de Mexico bought the Mexican currency at an average price of 13.1877 per dollar at a sale of $1 billion and 13.7069 at a sale of $96 million.

Mexico's central bank has tapped foreign reserves to stem losses as investors pulled out of emerging markets. Reserves have fallen 9.4 percent to $78.7 billion in the week ended Oct. 17 from a record $86.9 billion on July 18.

`Risk Aversion'

Yields on Mexico's benchmark peso-denominated bond rose for an eighth trading day, reaching a 3 1/2-year high. Standard & Poor's lowered Russia's credit rating outlook to negative, while Argentine lawmakers battled to block President Cristina Fernandez de Kirchner from seizing privately managed pension funds as the government struggles to avert a default.

``Risk aversion is very strong,'' said Benito Berber, a strategist at RBS Greenwich Capital Markets Inc. in Greenwich, Connecticut. This makes investors ``run toward the dollar at any price.''

Mexico will fail to grow next year as a slowing global economy erodes demand for commodities and curbs capital flow, wrote Nick Chamie, head of emerging-market research at RBC Capital Markets in Toronto, in a note to clients today. He had previously forecast a 3.3 percent expansion in Mexico for 2009.

Oil has fallen 20 percent from a year ago.

`Even Worse'

Yields on Mexico's 10 percent bond due in December 2024, the country's most actively traded security in pesos, rose 37 basis points, or 0.37 percentage point, to 11.02 percent, the highest since May 2005. The yield has climbed 2.12 percentage points since Oct. 13. The bond's price fell 2.65 centavo to 92.32 centavos per peso today, according to Banco Santander SA.

``The surge in yields on Mexico's long-term bonds shows investors are pricing in that the situation is going to get even worse,'' said Omar Martin del Campo, a trader at Banco Ve Por Mas SA in Mexico City.

Inflation unexpectedly quickened in the first half of October, Banco de Mexico said today. Consumer prices rose 0.49 percent in the first two weeks of the month after increasing 0.44 percent in the same period in September. Economists surveyed by Bloomberg News forecast consumer prices to rise 0.35 percent, according to the median of 16 estimates.

To contact the reporter on this story: Valerie Rota in Mexico City at vrota1@bloomberg.net



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Copper, Nickel Extend Declines on Lower World Demand for Metals

By Claudia Carpenter and Millie Munshi

Oct. 23 (Bloomberg) -- Copper fell to a three-year low and nickel dropped to the lowest since 2003 on speculation that a global economic slump will curb demand for metals from investors who had helped send commodities to a record in July.

Copper fell below $4,000 a metric ton in London for the first time since October 2005, and the Reuters/Jefferies CRB Index of 19 commodities touched its lowest level since February 2004. The Bloomberg World Mining Index of 162 companies lost $493 billion in value since the bankruptcy of Lehman Brothers Holdings Inc. in September deepened the financial crisis.

``As long as we have uncertainty about the overall financial system, this is probably not yet the bottom for base metals,'' said Christoph Eibl, who helps manage more than $1 billion of commodity investments at Tiberius Asset Management AG in Zug, Switzerland. ``People just don't want to own any commodities that have a high correlation to overall economic developments.''

Copper for delivery in three months declined $115, or 2.8 percent, to $4,040 a ton on the London Metal Exchange. The price earlier reached $3,815, the lowest since Oct. 24, 2005. Copper has lost 55 percent since touching a record $8,940 on July 2.

The abrupt drop since then has brought ``the end of the supercycle'' for copper, and the market will remain depressed until the international economic situation improves, said Jose Pablo Arellano, the executive president of Chile's Codelco, the world's biggest copper miner.

Recession Fears

Most European equity indexes fell and shares in Japan dropped to the lowest in more than five years. BHP Billiton Ltd., the world's biggest mining company, dropped as much as 13 percent in London Stock Exchange trading.

The number of U.S. workers filing first-time claims for unemployment benefits rose last week, a report showed today. U.K. retail sales fell in September, while French business confidence dropped to the lowest in 15 years this month.

The Japanese government said this week that the world's second-largest economy has probably entered its first recession in six years.

``These global recession fears don't seem unfounded,'' said Michael K. Smith, president of T&K Futures & Options in Port St. Lucie, Florida. ``There are pretty clear signs from all over the world that things are slowing down a lot. There's definitely more room on the downside for copper.''

New York Copper

In New York, copper futures plunged to the lowest price in more than three years, dropping as much as 7.9 percent and extending the week's decline to 17 percent. The metal is down 37 percent since the end of September, heading for its worst month on record on signs of waning consumption in the U.S. and Asia.

``We're seeing a slowdown in China,'' Russell Norton, head of commodity sales at Barclays Capital in Asia, said in a Bloomberg Television interview. Buying patterns there ``have always been very price-sensitive, so when they see a falling market, the buyers step back and let the market fall.''

Copper futures for December delivery fell 6.1 cents, or 3.3 percent, to $1.8045 a pound on the Comex division of the New York Mercantile Exchange. Earlier, the price touched $1.718, the lowest for a most-active contract since Sept. 27, 2005.

Inventories of copper in warehouses monitored by the LME advanced 1,500 tons to 209,250 tons, and aluminum stockpiles jumped 3,475 tons to 1.5 million tons, the most since February 1995, exchange figures show.

Nickel Drops

Nickel declined $650, or 6.5 percent, to $9,350 a ton after falling to $9,000. Nickel's biggest use is in making stainless steel. That market is ``weaker'' partly because of postponed purchases by some distributors as nickel prices fell from this year's high of $35,150 in March, Outokumpu Oyj, the world's fourth-largest maker of stainless steel, said in a statement today. Nickel has dropped 73 percent from this year's peak.

Aluminum edged up $2 a ton, closing at $2,007, after falling as much as 2.3 percent to $1,958, the lowest since November 2005, on the LME. Vimetco NV, the aluminum producer controlled by Russia's Vitaliy Machitski, cut annual production by 80,000 tons in China and will delay investment after prices slumped, the Amsterdam-based company said in a statement today. China is the world's largest producer of aluminum.

Zinc rose $60, or 5.3 percent, to $1,200 a ton on the LME after dropping as much as 5.6 percent earlier to touch $1,076; lead gained $26, or 2.1 percent, to $1,287 a ton; and tin climbed $450, or 3.9 percent, to $12,000 a ton.

To contact the reporters on this story: Claudia Carpenter in London at ccarpenter2@bloomberg.net or ccarpenter2@bloomberg.net; Millie Munshi in New York at mmunshi@bloomberg.net.

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Corn, Soybeans Rise as Snow, Winds Threaten U.S. Midwest Crops

By Jeff Wilson

Oct. 23 (Bloomberg) -- Corn and soybeans rose for the first time in three days as rain, snow and strong winds threaten crops in the U.S. Midwest, where supplies are already limited because farmers withheld sales because of low prices.

As much as 3.5 inches of rain fell in parts of the Midwest, and winds as high as 65 miles (105 kilometers) an hour hit crops, said Drew Lerner, the president of World Weather Inc. in Overland Park, Kansas. Snow is falling from Colorado to Nebraska. Some farmers halted sales after prices plunged from records this year, said Don Roose, the president of U.S. Commodities Inc.

``The winter mix of weather has raised concern that crops are getting smaller,'' Roose said. ``Farmers have dug in and will not sell, which is now boosting cash bids'' from livestock producers and processors, Roose said from West Des Moines, Iowa.

Corn futures for December delivery rose 5.25 cents, or 1.4 percent, to $3.9025 a bushel on the Chicago Board of Trade. The most-active contract has fallen 51 percent from a record $7.9925 in late June, touching an 11-month low of $3.71 on Oct. 16.

Soybean futures for January delivery gained 23.75 cents, or 2.7 percent, to $8.885 a bushel. The price fell to $8.38 on Oct. 16, the lowest since August 2007. The commodity has dropped 46 percent since setting a record $16.3675 in July.

Slow Harvests

The harvests are behind last year's pace after wet weather during planting forced growers to seed crops later than normal, a government report showed this week.

About 29 percent of the corn crop was collected as of Oct. 19, compared with 58 percent a year earlier, the Department of Agriculture said. Sixty-seven percent of the soybean crop was harvested, down from 72 percent.

The government probably overstated the size of this year's soybean crop because late plantings and cool temperatures in August hurt yields, said Greg Wagner, a senior analyst for AgResource Co. in Chicago. Yields may approach 38 bushels an acre, compared with 39.5 bushels forecast by the USDA this month, Wagner said.

Corn and soybeans also rose after crude oil rebounded from a 16-month low. A rally in fuel prices may boost demand for ethanol and biodiesel made from crops, Wagner said.

The dollar was little changed against a basket of major six currencies after rising to the highest in two years. The gauge has climbed 22 percent from a record in March. A strong dollar limits the purchasing power of importing nations.

``Grain markets are ready to begin a bottoming process,'' Wagner said. ``The key will be a weaker dollar and improving oil prices.''

Corn is the biggest U.S. crop, valued at a record $52.1 billion in 2007, followed by soybeans $26.8 billion, government figures show.

To contact the reporter on this story: Jeff Wilson in Chicago at jwilson29@bloomberg.net

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Brazilian Stocks Tumble on Earnings Concern; Argentina Gains

By Alexander Ragir and James Attwood

Oct. 23 (Bloomberg) -- Brazilian stocks fell for a third day after analysts cut their economic growth estimates on the prospect of slower commodities demand and said the real's decline will reduce profits for the biggest retailers and food producers.

Cia. Brasileira de Distribuicao Grupo Pao de Acucar led retailers lower after Deutsche Bank AG cut profit estimates for the industry next year. Aracruz Celulose SA extended its three- day drop to 26 percent on concern it may post more losses on currency derivatives. Uniao de Bancos Brasileiros SA fell almost 10 percent after RBC Capital Markets lowered Brazil's 2009 economic growth forecast to 2.5 percent.

``It's a combination of a lot of bad news,'' said Julio Martins, who oversees $173 million as investment director at Banco Prosper in Rio de Janeiro. ``We have speculation companies will be hurt by the currency volatility, worries about credit and the financial sector, coupled with a sharp drop in commodities.''

The Bovespa index dropped 3.6 percent to 33,818.49. Mexico's Bolsa index dropped 5.3 percent. Chile's Ipsa rose 0.2 percent. Argentina's Merval gained 2.4 percent. The MSCI Emerging Markets Index fell 3.7 percent.

Brazilian retailers' earnings estimates were cut by an average of 9 percent due to ``a further slowdown and weaker currency in Brazil than previously anticipated,'' wrote Deutsche analyst Reinaldo Santana.

Pao de Acucar dropped 4.3 percent to 27.70 reais.

Internet retailer B2W Cia. Global do Varejo fell 3.7 percent to 23.40 reais after Deutsche cut the retailer's share-price estimate to 50 reais from 70 reais.

Brazil Growth

RBC lowered its 2009 economic growth forecasts for Brazil and Mexico as a slowing global economy will erode demand for commodities and curb capital flows to emerging markets.

The Brazilian economy will expand 2.5 percent next year, compared with a previous estimate of 4 percent, said Nick Chamie, head of emerging-market research for RBC.

Finance Minister Guido Mantega has said economic growth in 2009 should slow to between 4 percent and 4.5 percent, from an estimated 5 percent this year.

Cia. Vale do Rio Doce, the world's biggest iron ore miner, dropped 3.3 percent to 23.30 reais. Copper fell to a three-year low and nickel dropped to the lowest since 2003 on speculation the global economic slump will crimp demand for metals.

BM&FBovespa SA fell the most on the Bovespa, losing 12 percent to 4.86 reais. Investors estimate that average daily trading at Latin America's biggest securities exchange will fall below 5 billion reais as share prices fall and investors stay away from riskier assets, said Victor Mizusaki, analyst at Itau Corretora in Sao Paulo.

Currency Concerns

Aracruz dropped 10 percent to 2.55 reais. The company is calling on banks to negotiate new terms for derivatives positions, Valor Economico said yesterday. It reported a net financial loss of 2.46 billion reais in the third quarter, including a charge of 2.1 billion reais for derivatives contracts.

Banks including Banco Itau BBA SA have been involved in derivatives transactions with Aracruz and are apprehensive on the prospect of negotiations, Valor said, without saying where it got the information.

Banco Itau Holding Financeira SA, the parent of Banco Itau BBA SA, fell 8.2 percent to 19.59 reais. Unibanco, the third- biggest non-government bank, fell 1.50 reais to 11.50 reais.

The real rose 5.2 percent against the dollar today after Brazil's central bank stepped up its interventions in the foreign-exchange market. It said it's prepared to sell as much as $50 billion of currency swaps to stem a two-month, 28 percent tumble in the real.

Merval Rebounds

Argentina's Merval rose for the first time this week after lawmakers said they would seek to limit how the government uses $29 billion in pension assets it plans to confiscate.

``After two days of such strong falls, there are some who get motivated to invest a bit of money,'' said Francisco Schumacher, an analyst at Raymond James & Associates Inc. ``The idea is that Congress limits what the government can do with these funds. What they don't want is that everything is sold to finance the government.''

The private pension funds, set up in 1994 to help bolster capital markets, own about 27 percent of shares available for public trading in Argentina.

Tenaris SA, the world's largest maker of pipes for the oil and steel industry, rose 3.4 percent after crude oil rebounded from a 16-month low.

Mexico's Bolsa fell for a third day, led by Desarrolladora Homex SAB, the biggest homebuilder.

Homex dropped 9.9 percent to 44.64 pesos after a mortgage finance company got government assistance, signaling the lender may lack liquidity needed to fund loans.

In other Latin American markets, Peru's Lima General fell 4.4 percent and Colombia's IGBC slid 3 percent.

To contact the reporters on this story: Alexander Ragir in Rio de Janeiro at aragir@bloomberg.net. James Attwood in Santiago at jattwood3@bloomberg.net.

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U.S. Stocks Rise, Led by Energy Shares on Rebound in Oil Prices

By Elizabeth Stanton

Oct. 23 (Bloomberg) -- U.S. stocks rose for the first time in three days as a rebound in oil from a 16-month low bolstered speculation that the global economic slump won't worsen.

Exxon Mobil Corp. and Chevron Corp. rallied more than 8 percent on expectations OPEC will trim output to stem a slide in crude prices. The Dow Jones Industrial Average recovered from a 276-point drop that sent it below its lowest close since April 2003 as Boeing Co. and AT&T Inc. climbed more than 6 percent. Amgen Inc., the world's largest biotechnology company, jumped 12 percent on profit that rose fivefold and an increased forecast.

The Standard & Poor's 500 Index rebounded from a 5 1/2-year low, gaining 11.33 points, or 1.3 percent, to 908.11. The Dow rose 172.04, or 2 percent, to 8,691.25. The Nasdaq Composite Index slipped 11.84, or 0.7 percent, to 1,603.91.

``There are whole segments of stocks moving in the same direction, if not the same magnitude, as oil,'' said Janna Sampson, co-chief investment officer at Oakbrook Investments LLC in Lisle, Illinois, which manages $1.2 billion. ``It's serving as a proxy for the health of the broader global economy.''

The earlier retreat in stocks was led by financial and consumer shares after home foreclosures surged to a record and the credit crisis hammered earnings at asset-management and real-estate companies.

The S&P 500 closed at the lowest level since April 2003 and oil futures touched the lowest since June 2007 yesterday on concern a deepening global economic slump will damp profits.

Emerging Markets Tumble

An index of emerging-market stocks slid 3.7 percent today and developing nations' borrowing costs neared a six-year high after S&P threatened to cut Russia's debt ratings as the global credit crisis deepened. Russian stocks tumbled to a three-year low.

Exxon Mobil, the largest oil company, added $5.82 to $70.39. Chevron, the second-biggest U.S. energy producer, advanced $5.03 to $66.77.

The S&P 500 Energy Index climbed 6.6 percent, rebounding from a 10 percent tumble yesterday. The group is trading for 6.5 times estimated earnings for the next 12 months, near the lowest valuation since Bloomberg began tracking the data.

Crude oil for December delivery rose 1.6 percent to settle at $67.84 a barrel at 2:42 p.m. on the New York Mercantile Exchange, then climbed to $69.20 in after-hours electronic trading. Prices are down 20 percent from a year ago.

`Still Need Energy'

``For a certain level of base economic activity, we still need to consume energy,'' said Erick Maronak, the New York-based chief investment officer at Victory Capital Management, which oversees $63 billion, including National Oilwell Varco. ``Everything has a clearing price, and we may be hitting that in the energy sector right now.''

National Oilwell Varco Inc., the biggest U.S. maker of oilfield equipment, climbed 9.4 percent to $26.78 after its profit increased 50 percent, topping analysts' estimates, as customers increased spending on rigs and supplies.

Dow Chemical Co., the largest U.S. chemical company, added 10 percent to $24.43 as earnings beat projections on higher prices for latex and plastics used in packaging.

Amgen gained $5.85 to $55.55 for the biggest advance in the S&P 500. The world's largest biotechnology company said third- quarter profit advanced as sales of anemia drugs increased. The company forecast full-year earnings of at least $4.45 a share, topping the average estimate of $4.37 by analysts in a Bloomberg survey.

Citrix Systems Inc. climbed 11 percent to $22.12. The maker of computer-networking software said, excluding some items, it expects to earn 43 cents a share in the fourth quarter. That beat the average analyst estimate by 16 percent.

Volatile Month

The S&P 500 has moved more than 1 percent on 14 of the 17 trading days this month, making it the most volatile by that measure since September 1932, according to S&P analyst Howard Silverblatt. Stock prices are gyrating as investors weigh government efforts to unlock credit markets with growing concern that the global economy is headed for a recession.

MGIC Investment Corp. slumped 35 percent to $2.71 for the biggest drop in the S&P 500. The company eliminated its dividend today after five quarters of losses. Fox-Pitt Kelton Cochran Caronia Waller cut its rating on the shares to ``in line'' from ``outperform'' on concern the company will forced to raise capital.

Goldman Sachs Group Inc. was the biggest drag on financials, falling 5.3 percent to $108.58. The New York-based securities firm that plans to convert into a bank may cut about 3,200 jobs, or 10 percent of its workforce, said a person briefed on the plans who declined to be identified.

Housing Slump

Pulte Homes Inc. retreated 18 percent to $8.11 and led a gauge of 15 homebuilders to a seven-year low after Chief Executive Officer Richard Dugas said the U.S. housing market worsened in the third quarter and urged the government to pass a tax credit for homebuyers to spark demand.

Banks and builders also retreated as a report showed home foreclosures climbed 71 percent in the third quarter. A total of 765,558 U.S. properties got a default notice, were warned of a pending auction or were foreclosed on in the quarter, RealtyTrac, an Irvine, California-based seller of default data said. Rick Sharga, executive vice president of marketing for RealtyTrac, said he wouldn't be surprised if foreclosures continue to increase.

Money Managers

An S&P index of money managers slid as much as 8.2 percent with 14 of 16 of its companies declining after two investment management firms reported lower earnings stemming from this year's stock-market rout. The group pared its drop to 1.2 percent in the afternoon as the market climbed higher.

Franklin Resources Inc., manager of the Franklin and Templeton mutual funds, tumbled 10 percent to $55.74 after fiscal fourth-quarter earnings fell 30 percent. Janus Capital Group Inc. lost 17 percent to $8.61 following a 49 percent decline in third-quarter earnings.

Losses stemming from the collapse of the U.S. subprime mortgage market have surpassed $650 billion globally, prompting the U.S. and at least 10 European countries to inject capital into their banking systems to resuscitate lending.

A key gauge of banks' willingness to lend, the London interbank offered rate for dollars, has declined over the past two weeks, indicating the measures are working to some degree. Three-month Libor held at 3.54 percent today, down from 4.82 percent on Oct. 10. During the six months through Sept. 15, the rate ranged from 2.54 percent to 2.92 percent.

Coca-Cola Enterprises Inc. fell 18 percent to $9. The world's largest soft-drink distributor lowered its profit forecast for the year after third-quarter sales of cold bottled drinks in North America fell. Coca-Cola Co., which owns 35 percent of Coca-Cola Enterprises, was the biggest drag on the Dow average, falling 5.1 percent to $43.06.

To contact the reporter on this story: Elizabeth Stanton in New York at estanton@bloomberg.net

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Canadian Stocks Rally as EnCana, Toronto-Dominion Bank Rebound

By John Kipphoff

Oct. 23 (Bloomberg) -- Canadian stocks gained for the first time in three days, led by energy companies, after crude oil- prices rallied from a 16-month low and EnCana Corp. reported earnings that beat analysts' estimates.

Toronto-Dominion Bank paced an advance among financial shares after Canada said it will provide guarantees on commercial bank debt to revive lending and match bailouts offered by other countries. Teck Cominco Ltd. declined, leading raw-materials producers to a three-year low, as copper and gold prices slumped and the miner reported lower profit.

The Standard & Poor's/TSX Composite Index rose 1 percent to 9,331.35. Canada's benchmark, which derives three-quarters of its value from commodity and financial shares, dropped a much as 3.8 percent earlier to the lowest since December 2004.

``For Canada to rally, we have to get confidence to return,'' said Tony Demarin, who oversees about $75 million as chief investment officer at BCV Asset Management Inc. in Winnipeg. ``Commodity prices have to stop falling.''

The S&P/TSX has fallen 21 percent in October, poised for its steepest monthly drop since the crash of October 1987, as oil, metals and grain prices slumped on concern that more than $660 billion in credit losses will slow down the global economy and destroy demand for the Canada's commodity-related assets.

EnCana rose 8.5 percent to C$55.05. Canada's largest gas producer said third-quarter profit more than tripled to $3.55 billion. Excluding such items as a $2 billion gain in the value of hedging contracts, profit was $1.92 a share, 15 cents higher than the average of 15 analyst estimates compiled by Bloomberg.

Profit Gain

Petro-Canada gained 9.4 percent to C$27.80. The country's third-largest oil company said third-quarter profit rose 61 percent to C$1.25 billion, beating analyst estimates. Petro- Canada also said that it may pare back plans to develop its Fort Hills oil-sands project with partner UTS Energy Corp., after the mine's cost estimate climbed by 50 percent to C$23.8 billion.

UTS added 4 percent to C$1.03, paring its drop this year to 81 percent

Imperial Oil Ltd., Canada's biggest oil and gas producer by output, surged 7.2 percent to C$39.11.

Crude oil rose 1.6 percent to $67.84 a barrel in New York after OPEC's president said that members had reached a consensus on the need to trim production and Iran said the cut may be as much as 2 million barrels a day.

Measures of energy and financial shares gained 3.3 percent and 1.7 percent today, respectively. For the month, the two groups are down 25 percent and 15 percent.

`Beaten Down'

``We had some better-than-expected results,'' Demarin said. ``After being beaten down, the energy business still has a lot of upside.''

Canada's government will provide guarantees on as much as C$218 billion ($173 billion) of commercial bank debt, Finance Minister Jim Flaherty told reporters today in Ottawa. The government has also agreed to buy as much as C$25 billion of mortgages from banks.

Toronto-Dominion, Canada's second-largest lender by assets, added 4.5 percent to C$58. Bank of Montreal, the country's fourth-biggest, gained 7.5 percent to C$44.24, the most since Oct. 14. Sun Life Financial Inc., the third-largest insurance company in Canada, advanced 7.8 percent to C$30.98.

Bank of Nova Scotia fell 3.9 to C$34.49 and earlier touched the lowest intraday price since November 2004. Canada's third- largest lender was downgraded by BMO Capital Markets analyst Ian de Verteuil, who cited rising loan losses and deteriorating emerging markets conditions.

Commodities Dip

Copper fell below $4,000 a metric ton in London for the first time since October 2005 and the Reuters/Jefferies CRB Index of 19 commodities touched its lowest level in four years. Gold dropped below $700 an ounce in New York.

Teck Cominco Ltd. slid 12 percent to C$12.54 and earlier fell 19 percent for a record intraday drop. Canada's largest diversified miner said third-quarter profit slid 13 percent to C$424 million, on lower zinc and copper prices.

Barrick Gold Corp., the biggest bullion miner in the world, fell 5.4 percent to C$23.64. Kinross Gold Corp., Canada's third- largest bullion mining company, dropped 11 percent to C$10.09.

A gauge of raw-materials stocks has fallen 39 percent this month, leading all 10 industries in the S&P/TSX lower.

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

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