Subbarao Abandons India `Inflation Vigil,' May Cut Rates Again

By Cherian Thomas

Nov. 3 (Bloomberg) -- Indian central bank governor Duvvuri Subbarao has abandoned the ``inflation vigil'' he outlined just 10 days ago in his inaugural monetary policy statement.

For the first time since 1997, the Reserve Bank of India on Nov. 1 deployed all three of its main tools to shore up growth after inter-bank lending rates climbed to 21 percent. Economists at Yes Bank Ltd. and Standard Chartered Bank predict more interest-rate cuts following the weekend reduction.

``India's central bank has no other option but to focus on economic expansion,'' said Shubhada M. Rao, chief economist at Yes Bank Ltd. in Mumbai. ``Global cues have turned against growth and it was surprising to see the hawkish tones on inflation'' last month, he said.

Subbarao, less than two months into the job, has grappled with monetary policy at a time when inflation is double the central bank's target and a global downturn threatens to hit the economy. The central bank's renewed focus on growth aligns with Prime Minister Manmohan Singh's push to buoy the economy ahead of elections due by May.

The decision to cut rates on Nov. 1 is a U-turn from the stance Subbarao spelled out in his first statement. At that time, he said price pressures could come from lower farm production, volatile oil prices and a weaker rupee.

Subbarao's emphasis on inflation in his Oct. 24 statement took investors by surprise. Only four days earlier he had cut the repurchase rate by 1 percentage point following a meeting with Prime Minister Singh. In the previous two weeks he had reduced the cash-reserve ratio by 250 basis points.

Change in Tack

Nov. 1 marked another change. Subbarao slashed the repurchase rate again, lowering it by 50 basis points to 7.5 percent. He also reduced the amount of deposits that lenders need to set aside as cash reserves to 5.5 percent from 6.5 percent, and in government debt to 24 percent from 25 percent.

Last week also saw the capitulation of Japan, which abandoned a two-year struggle to raise the lowest borrowing costs among major economies. The Bank of Japan on Oct. 31 cut its key overnight lending rate by 20 basis points to 0.3 percent after the Fed lowered its target rate for overnight loans to 1 percent, matching a half-century low. Norway, China, Taiwan and Hong Kong also trimmed their benchmark rates last week.

India's weekend announcement came as cash dwindled in the banking system, as evidenced by a tripling in overnight call money rates last week. Cash dried up as overseas investors pulled out a record $12.8 billion from Indian stock markets this year and the central bank sold dollars to slow the pace of the rupee's decline.

Foreign Reserves

India's foreign-exchange reserves fell $15.5 billion in the week ended Oct. 24, the most on record, to $258.4 billion. The rupee is down 20 percent this year, the second-worst performer after the South Korean won of Asia's 10 most-active currencies.

``The writing was on the wall for more policy rate cuts because of the liquidity crunch,'' said Indranil Pan, chief economist at Mumbai-based Kotak Mahindra Bank Ltd. ``We will see more liquidity-unfreezing measures.''

India's decision to lower borrowing costs was taken ``in view of the ebbing of upside inflation risks and also to address concerns relating to the moderation in the growth momentum,'' the central bank said in its statement on Nov. 1.

Inflation in India has dropped below 11 percent for the first time since May. Wholesale prices rose 10.68 percent in the week to Oct. 18 from a year earlier after gaining 11.07 percent in the previous week.

Commodity Prices

Standard Chartered economist Anubhuti Sahay expects inflation to slow to as much as 3.5 percent by the end of the second quarter of 2009, helped by a decline in commodity prices. Sahay expects the repurchase rate to be at 6 percent by then.

Investors expect stocks, bonds and rupee, which gained last week, to advance further today. The Sensitive index, which has halved this year, rose 12.5 percent last week, and the rupee climbed 0.7 percent, snapping an 11-week losing streak.

The yield on benchmark 10-year government paper, which dropped 1.12 percentage points to 7.5 percent last month as bonds completed their best month in almost a decade, may decline to 7.35 percent today, said Arvind Sampath, head of interest- rate trading at Standard Chartered Plc in Mumbai.

`It was a good set of measures that addressed the most pressing need of the hour, which is to ease liquidity constraints in the system,'' Sampath said. ``The repo-rate cut is a proactive step that takes advantage of falling inflation to tackle the slowdown in growth.''

To contact the reporter on this story: Cherian Thomas in New Delhi at Cthomas1@bloomberg.net

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Korean Won Erases Losses as Global Funds Buy Stocks Fourth Day

By Kim Kyoungwha

Nov. 3 (Bloomberg) -- The South Korean won erased earlier losses as global funds bought more shares than they sold for a fourth straight day.

The won traded at 1,291.90 per dollar as of 9:46 a.m. local time, compared with 1,291 won on Oct. 31, after falling as much as 1.7 percent earlier, according to Seoul Money Brokerage Services Ltd. The Kospi index gained 2.6 percent.

To contact the reporters on this story: Kim Kyoungwha in Beijing at kkim19@bloomberg.net.

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Australian, New Zealand Dollars Rise on Rate Cut Expectations

By Candice Zachariahs

Nov. 3 (Bloomberg) -- The Australian and New Zealand dollars rose on anticipation that rate cuts worldwide will bolster global economic growth.

The currencies rose before a meeting tomorrow where the Reserve Bank of Australia will reduce its benchmark rate 50 basis points to 5.5 percent, according to 13 of 14 economists surveyed by Bloomberg News. A basis point is 0.01 percentage point.

``There's a 50 basis-point rate cut priced in for this week,'' said Greg Gibbs, a currency strategist at ABN Amro Australia Ltd. in Sydney. ``The ranges of the past couple of weeks will be where we're trading the next few weeks as well.''

Australia's currency rose 0.3 percent to 67.01 U.S. cents as of 8:07 a.m. in Sydney from 66.79 cents late in New York Oct. 31. The currency advanced 0.5 percent to 66.08 yen.

New Zealand's dollar gained 0.3 percent to 58.42 U.S. cents from 58.27 in New York last week. It bought 57.60 yen from 57.38.

The currencies rose last week after central banks including the Federal Reserve and the People's Bank of China lowered borrowing costs to boost slowing growth.

New Zealand's dollar advanced after Finance Minister Michael Cullen said Nov. 1 that the government will guarantee overseas debt sales by the nation's banks to help maintain access to international wholesale funding.

The Australian dollar has fallen 19 percent versus the yen and 14 percent against the dollar over the past month as the collapse of Lehman Brothers Holdings Inc. on Sept. 15 led to a freeze in lending that spurred investors to dump equities on concerns the world economy is headed for a recession.

Futures traders last week increased their bets that the Australian dollar will decline against the U.S. dollar, figures from the Washington-based Commodity Futures Trading Commission show.

The difference in the number of wagers by hedge funds and other large speculators on a decline in the Australian dollar compared with those on a gain -- so-called net shorts -- was 9,819 on Oct. 28, compared with net shorts of 7,234 a week earlier.

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

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Trichet Extends ECB Power, May Cut Rates at Fastest Pace Ever

By John Fraher

Nov. 3 (Bloomberg) -- Jean-Claude Trichet is extending the European Central Bank's powers just as it gears up for what may be the fastest round of interest-rate cuts in its 10-year history.

President Trichet has pushed the central bank's reach into the euro region's neighboring economies as they struggle to cope with the financial crisis, and has approved record lending to banks. Economists predict the ECB will slash its benchmark rate, currently at 3.75 percent, to 2.5 percent by April after reducing it for the second time in a month on Nov. 6.

``The ECB is at times playing the role of lender of last resort for the whole European financial system,'' said Guillaume Menuet, a senior European economist at Merrill Lynch & Co. in London. ``Its mandate is being implicitly expanded.''

While Trichet's remit applies just to the 15-nation euro region, the absence of an institution charged with financial stability across the 27-member European Union created a vacuum the ECB is trying to fill. In the past three weeks alone, it gave a 5 billion-euro ($6.4 billion) loan to Hungary, set up currency swaps with Denmark and Switzerland and increased its lending to euro-region banks to more than $1 trillion.

Hungarian Prime Minister Ferenc Gyurcsany said on Oct. 28 he's lobbying EU leaders to allow the ECB to provide liquidity outside the euro area. ECB Executive Board member Lorenzo Bini Smaghi said on Oct. 31 the bank stands ready to help ``other'' eastern European countries that are ``asking for our help.''

The Hungarian, Polish and Czech stock indexes all fell more than 24 percent last month.

`Major Danger'

Economists expect more rate cuts from the ECB as it tries to cushion an economy hurtling toward a recession.

The central bank will probably cut its key rate by a half point this week, taking it to 3.25 percent, according to the median of 50 forecasts in a Bloomberg News survey. It will deliver another 75 basis points of easing in the following five months.

Consumer and executive confidence in the euro region's economic outlook plunged by the most since at least 1985 in October, the European Commission said Oct. 30.

``The ECB is only too well aware that extended, deep recession is now the major danger facing the euro-zone economies,'' said Howard Archer, chief European economist at IHS Global Insight in London.

The Bank of England will probably also cut its benchmark by 50 basis points, taking it to 4 percent, according to a separate survey.

Market Strains

Trichet and other policy makers are still trying to ease strains in financial markets that are crippling the global economy. Europe's corporate debt markets endured their worst month on record in October and the gap between the yields on 10- year German and Italian government bonds widened to 1.27 percent on Oct. 31, the most since 1997.

The ECB has responded by ramping up lending to cash- strapped banks, offering unlimited funds. The central bank said on Oct. 21 that lending to financial institutions jumped to a record, surging 68 percent from the first week of September.

That may create problems for the ECB as the risk of possible collateral losses grows, says Natacha Valla, a former ECB economist and now at Goldman Sachs Group Inc. in Paris.

``They have challenges for the future in having a balance sheet of unprecedented size,'' said Valla. ``The have to know how to deal with such a balance sheet, how much capital they have to hold, what it means for risk management. There is a whole set of questions that now have to be answered.''

Not Alone

The ECB isn't the only European institution trying to guarantee financial stability. The EU said on Oct. 29 it's ready to contribute 6.5 billion euros to an International Monetary Fund-led rescue package for Hungary, and European governments coordinated efforts last month to shore up the region's banking system.

Still, some economists and politicians say the ECB's pivotal position at the heart of the financial system should be more formally recognized.

Hungary's Gyurcsany said on Oct. 28 he wants EU leaders to allow the ECB to accept local government bonds as collateral for foreign-currency swaps, saying ``it is extremely important from Poland to Hungary to have these repo facilities in place.''

``My dream is that the ECB gets a financial stability mandate, which is not the case so far,'' said Valla. ``The ECB really has demonstrated it can fulfill such a mandate.''

To contact the reporter on this story: John Fraher in London at jfraher@bloomberg.net

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Pound May Drop 18% Versus Yen on Carry Unwind, Citigroup Says

By Candice Zachariahs

Nov. 3 (Bloomberg) -- Investors should sell the pound against the yen as it may drop 18 percent against the Japanese currency because Britain's banks will have to ``drastically'' cut lending after short-term funding dried up, Citigroup Inc. said.

The U.K.'s gross external liabilities are nearly five times as large as the nation's gross domestic product, wrote a team of Citigroup analysts led by New York-based currency strategist Todd Elmer. Banks built up 50 to 60 percent of the obligations, using loans from countries with low interest rates to invest in the U.K.

``The massive foreign borrowing has driven an economy-wide carry trade which employed cheap foreign funds to finance domestic investment and consumption,'' wrote Elmer. Reduced capital inflow ``is set to exert a severe downward draft on the pound.''

The pound traded at 158.62 yen as of 8:19 a.m. in Tokyo from 158.28 yen on Oct. 31. The currency has lost 15 percent against the yen over the past month. It traded at $1.6107 per pound from 1.6076 late last week.

Investors should sell the pound and buy Japan's yen, wrote Citigroup, as Britain's currency could test its 1995 lows. The pound bought 129.37 yen in April 1995.

In carry trades, investors seek higher returns on funds from countries with low-borrowing costs such as the U.S. or Japan, where interest rates are 1 percent and 0.3 percent, respectively. The Bank of England cut its benchmark interest rate to 4.5 percent on Oct. 9. The risk in carry trades is that currency market moves will erase profits.

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

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Templeton, Sydbank See Won, Rupiah, Rupee Bottom on Reserves

By Lilian Karunungan and Kim Kyoungwha

Nov. 3 (Bloomberg) -- The biggest rout in Asian currencies since the crisis in 1997 is tempting investors to buy in the region that still enjoys the world's fastest economic growth and $4 trillion of reserves.

Franklin Templeton Investments, which manages about $500 billion, favors the Malaysian ringgit and China's yuan. Sydbank A/S, Denmark's third-largest bank, is buying South Korean won, Indonesian rupiah and Indian rupee. Goldman Sachs Group Inc. said last week that the won, Asia's worst-performer this year after falling 29 percent against the dollar, may gain 12 percent the next six months.

``We have taken advantage of the recent broad-based weakness to increase our exposure to some Asian currencies,'' said Michael Hasenstab, manager of the $9.6 billion Templeton Global Bond Fund in San Mateo, California. ``The differential in growth between Asia and other regions should continue to attract capital, and growth may further benefit from initiatives of local governments that have significant resources to bolster domestic demand.''

While stocks and foreign exchange rates in emerging markets tumbled since the collapse of Lehman Brothers Holdings Inc. in September, Templeton, Sydbank and Mirae Asset Global Investments Ltd., which oversee a combined $563 billion, say Asian economies are safer because banks and governments spent a decade amassing reserves, laying the foundation for sustained growth.

Reserve Pools

China, India and Southeast Asia's five other largest economies will grow 8.4 percent this year and 7.7 percent in 2009, according to the International Monetary Fund in Washington. In the U.S., where financial companies have been battered by about $430 billion of subprime-related losses, gross domestic product will expand 0.1 percent next year. The forecast for the 15 European nations sharing the euro is 0.2 percent.

Asian nations have seven of the 10 biggest pools of foreign-exchange reserves, according to data compiled by Bloomberg. China's $1.9 trillion holdings account for 28 percent of the worldwide total. Japan has the second-highest tally at $969 billion. India, Taiwan, South Korea, Singapore, Hong Kong and Malaysia each have more than $100 billion, the data show.

``For a longer-term picture, Asian currencies should perform better,'' said Wilfred Sit, who helps oversee $10 billion as chief investment officer in Hong Kong for Mirae, South Korea's biggest asset manager. ``We are not the center of this turmoil and, in general, governments and people have their savings.''

Currency Rebound

The won and the rupee strengthened last week after central banks in the U.S., China, South Korea, Japan and Taiwan cut interest rates. India unexpectedly lowered its benchmark rate to 7.5 percent from 8 percent on Nov. 1 to boost growth.

Korea's won climbed 10 percent, rebounding from a decade- low 1,495 per dollar on Oct. 28, while the rupee gained 1 percent to 49.4575 to the dollar. The rupiah closed at 10,975 per dollar, after touching a seven-year low of 11,900. The median estimates of analysts surveyed by Bloomberg show the won may rise to 1,250 by the end of March and the rupiah to 9,700.

``The currencies have cheapened massively,'' said Holger Friedrich, a portfolio manager in Aabenraa at Sydbank, with $3.7 billion in emerging-market debt. ``Weaker currencies should help accelerate growth, by making exports more competitive.''

The past three months have been some of the tumultuous ever as a seizure in credit markets and the bankruptcy of New York- based Lehman prompted investors to dump emerging-market assets.

Rising Volatility

The Bloomberg-JPMorgan Asia Dollar Index, which tracks the region's 10 most-active currencies excluding the yen, fell 7.4 percent in August, September and October, its worst stretch since plunging 16 percent in the period ended Jan. 30, 1998. Last month alone Indonesia's rupiah dropped 13 percent, the won tumbled 8 percent and the Indian rupee declined 5 percent. The MSCI Emerging Markets Index of stocks lost 28 percent.

JPMorgan's Emerging Market Volatility Index soared to a record 32.96 on Oct. 23 before ending last week at 25.53. The index never exceeded 15.66 until Lehman's bankruptcy, according to data compiled by Bloomberg.

The slide in Asian currencies led companies including Citic Pacific Ltd., the Hong Kong arm of China's biggest state-owned investment company, to lose money on currency hedges. Taesan LCD Co., a South Korean supplier of back-light units for computer screens, failed under the weight of such losses. ICICI Bank Ltd., India's second-biggest lender, suffered a run on deposits after disclosing losses on investments in Lehman.

`Wait to See'

There may be worse to come, as more than a dozen developing nations will likely turn to the IMF for emergency funding, said Stephen Jen, the global head of currency research at Morgan Stanley in London. Ukraine, Hungary and Iceland have already received IMF assistance.

Japan's yen and the U.S. dollar have been the biggest beneficiaries of the disruption in emerging market currencies. The yen gained 14 percent versus the won last month, 19 percent against the rupiah and 12 percent versus the rupee.

``I'm quite positive, but I still think we should wait to see some more signs of recovery,'' said Rajeev De Mello, head of Asian bonds in Singapore for Western Asset Management Co., which manages about $600 billion. ``If we do see more signs of stabilization, we could have some pretty good opportunities.''

De Mello is avoiding Asian currencies except for the Chinese yuan until credit markets ``normalize,'' a process he said is beginning. Western, which manages $600 billion, is part of Baltimore-based Legg Mason Inc. The yuan gained just 0.2 percent since the end of June, after strengthening 6.6 percent in the first half.

`Stronger Footing'

While funds are returning to Asian markets, the pace is slower than last year. Bank of New York Mellon, a custodian for more than $23 trillion in assets, is starting to see ``modest inflows'' into the Indian rupee and Singapore dollar. Cash moving into the rupee is 50 to 75 percent of the average last year, said Samarjit Shankar, director of global strategy for the bank's Global Markets Group in Boston.

Templeton is betting Asian governments will use money they didn't have to spend bailing out banks to spur domestic demand, according to Hasenstab. While financial institutions worldwide have reported credit losses and writedowns of $685 billion since the start of 2007, banks in Asia have only taken $27 billion, according to data compiled by Bloomberg.

``The Asian financial system is on a stronger footing,'' said Hiroshi Morikawa, senior strategist in Tokyo at MU Investments Co., part of Mitsubishi UFJ Financial Group, Japan's biggest listed bank, which manages about $14 billion. ``That's why Asia's currencies have the potential to outperform.''

Pool Reserves

Thailand will propose Asian countries pool $350 billion of their reserves, Olarn Chaipravat, Thailand's deputy prime minister, said in an interview in Bangkok on Oct. 22. Some $200 billion would be set aside to buy equities, bonds and fund public projects. The rest would be used to protect currencies.

China's State Council cut taxes for exporters and approved construction programs including expressways and power stations on Oct. 21. Japan announced on Oct. 30 plans to pump $51 billion into the economy, targeting households and small businesses. Indian Prime Minister Manmohan Singh, who faces national elections in May, has increased government salaries and announced farm loan waivers to support the economy before the vote.

``China's foreign-exchange reserves stand like mountains in contrast to the capital-hungry conditions in much of the rest of the world,'' said Jeffrey Knight, the chief investment officer at Boston-based Putnam Investments, which manages $137 billion. ``These reserves lend resilience to China's economy, and, in turn, help to buffer Asian economies.''

To contact the reporter on this story: Lilian Karunungan in Singapore at lkarunungan@bloomberg.net; Kim Kyoungwha in Beijing at kkim19@bloomberg.net.

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Dollar Declines on Concern U.S.'s Economic Growth Is Slowing

By Ron Harui

Nov. 3 (Bloomberg) -- The dollar fell for the first time in three days against the euro on speculation that growth in the world's largest economy will slow further, backing the case for the Federal Reserve to cut interest rates.

The U.S. currency may decline for a second week as economists forecast the Institute for Supply Management's manufacturing index will drop to the lowest level since October 2001. The greenback also weakened versus 11 of the 16 most-active currencies as a Labor Department report on Nov. 7 may show payrolls contracted for a 10th straight month in October.

``I would expect another week of poor economic news that will reinforce the headwinds facing the global economy,'' said John Horner, a currency strategist at Deutsche AG in Sydney. ``This is something that should weigh on the dollar'' against the yen in particular, he said.

The dollar declined to $1.2772 per euro as of 8:01 a.m. in Singapore from $1.2726 late in New York on Oct. 31. It traded at 98.54 yen from 98.46 yen. The U.S. currency fell to $1.6113 against the British pound from $1.6076, and dropped to 1.1559 versus the Swiss franc from 1.1578. Trading volumes may be lower than normal today because of a public holiday in Japan.

Japan's currency weakened 0.5 percent to 125.89 per euro from 125.30 in New York on Oct. 31. It also fell 0.6 percent to 66.13 against Australia's dollar, from 65.74, and declined 0.9 percent to 57.90 versus New Zealand's dollar from 57.38.

The Institute for Supply Management's factory index declined to 41.5 in October from 43.5 the previous month, according to economists surveyed by Bloomberg News. A reading of less than 50 signals contraction. The report is scheduled for release at 10 a.m. in New York. Payrolls at U.S. employers shrank by 200,000 workers in October, a separate Bloomberg survey showed.

Futures on the Chicago Board of Trade indicate a 55 percent probability the Fed will reduce the target rate to 0.5 percent at its Dec. 16 meeting. The odds a week ago were zero. The rest of the bets are for a quarter-percentage point reduction.

To contact the reporters on this story: Ron Harui in Singapore at rharui@bloomberg.net

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Asia Commodities Day Ahead: Raw Materials Drop Most in 52 Years

Nov. 3 (Bloomberg) -- Commodities had the biggest monthly drop since at least 1956 on concern that a slump in global economic growth will sap demand for raw materials. Goldcorp Inc. reported third-quarter earnings that trailed analysts' estimates after labor and energy costs surged. Gold, silver and copper fell. Weyerhaeuser Co., the largest North American lumber producer, said third-quarter profit more than doubled. Soybeans, corn and wheat declined.

COMMODITIES INVESTMENT

Commodities Post Biggest Monthly Drop in 52 Years on Economy

Commodities had the biggest monthly drop since at least 1956 on concern that a slump in global economic growth will sap demand for raw materials. In October, the Reuters/Jefferies CRB Index of 19 raw materials plunged 22 percent. Crude oil tumbled by a third, the most ever, and gold dropped the most in 26 years.

FORESTRY PRODUCTS

Weyerhaeuser Profit More Than Doubles on Asset Sales

Weyerhaeuser Co., the largest North American lumber producer, said third-quarter profit more than doubled as it sold assets amid a U.S. homebuilding slump.

PRECIOUS METALS, GEMS

Goldcorp Profit Misses Estimates as Labor, Energy Costs Surge

Goldcorp Inc., the world's second-largest gold producer by market value, reported third-quarter earnings that trailed analysts' estimates after labor and energy costs surged.

Gold Posts Biggest Monthly Drop in 28 Years as Dollar Climbs

Gold futures fell, posting the biggest monthly decline in 28 years, as the dollar climbed, reducing the appeal of the precious metal as an alternative investment. Gold dropped $20.30, or 2.7 percent, to $718.20 an ounce in New York. Silver declined 5.5 cents, or 0.6 percent, to $9.73 an ounce.

Platinum, Palladium Climb After Falling by Half From Records

Platinum rose for the first week in three, and palladium gained on expectations demand for the metals used in car-exhaust parts and for making jewelry may return after the metals have dropped by almost half this year. Platinum gained $1, or 0.1 percent, to $831.60 an ounce in New York. Palladium jumped $2.85, or 1.4 percent, to $199.55 an ounce.

CHEMICALS

LyondellBasell to Idle Ethylene Plant as Demand Wanes

LyondellBasell Industries' Equistar unit will idle an olefin plant in Texas for several months because a weak economy is reducing demand for chemicals used to make plastics.

INDUSTRIAL METALS, MINING

Copper Falls, Capping Record Monthly Slide, as Demand Slumps

Copper prices fell, capping the biggest monthly drop ever, on speculation that a deepening economic slump will reduce global demand for metals. Copper dropped 6.15 cents, or 3.3 percent, to $1.829 a pound in New York.

AGRICULTURAL COMMODITIES

Corn, Soybeans Decline as Slowing World Economy Cuts Grain Use

Corn and soybeans fell, capping their fourth straight monthly declines, on speculation the deepening economic slump is reducing global demand for food, animal feed and fuel made from the crops. Corn dropped 8 cents, or 2 percent, to $4.015 a bushel in Chicago. Soybeans dropped 10 cents, or 1.1 percent, to $9.33 a bushel.

Wheat Falls as Economic Slump May Curb Demand for U.S. Supplies

Wheat fell for a second day to its worst monthly loss in 22 years as a worsening economic crisis and a rallying dollar eroded global demand for supplies from the U.S., the world's biggest exporter of the grain. Wheat dropped 1.75 cents, or 0.3 percent, to $5.3625 a bushel in Chicago.

Cattle Prices Rise on Signs of Falling Animal Supply; Hogs Drop

Cattle rose for a fifth day, posting the biggest weekly gain since 2004, on speculation that the supply of fattened animals to U.S. slaughterhouses is shrinking. Cattle advanced 1.25 cents, or 1.4 percent, to 92.7 cents a pound in Chicago. Feeder cattle gained 0.8 cent, or 0.8 percent, to 98.05 cents a pound. Hogs fell 1.2 cents, or 2.1 percent, to 54.8 cents a pound.

SOFT COMMODITIES

Orange Juice Falls as Stronger Dollar Crimps Commodity Demand

Orange juice fell amid a slump in commodities after the dollar strengthened, making raw materials priced in the U.S. currency more expensive for overseas buyers. Orange juice dropped 3.4 cents, or 4.1 percent, to 80.3 cents a pound in New York.

Coffee Price Rises in N.Y. on Bets Recession Won't Cut Demand

Coffee prices rose, gaining 4 percent for the week, on speculation slowing global economic growth may not reduce consumption. Arabica coffee climbed 2 cents, or 1.8 percent, to $1.13 a pound in New York. In London, robusta coffee fell $7, or 0.4 percent, to $1,603 a metric ton.

Cotton Posts Worst Month Since 1986 on Slower China Demand

Cotton prices fell, posting their steepest monthly decline in at least 22 years, on concern that China, the world's biggest user, will curb purchases from the U.S. as global demand for textile products slumps. Cotton dropped 0.8 cent, or 1.8 percent, to 44.29 cents a pound in New York.

Cocoa Has Biggest Monthly Slide in Five Years as Dollar Climbs

Cocoa fell, capping the biggest monthly decline in five years, as the dollar's rally eroded the appeal of U.S. commodities. Cocoa dropped $31, or 1.5 percent, to $2,053 a metric ton in New York.

Sugar Rises in N.Y., Gaining 12% This Week, on Short Supplies

Sugar futures rose, jumping 12 percent this week, as lower output in Brazil, the biggest producer, contributes to a global deficit. Raw sugar gained 0.17 cent, or 1.4 percent, to 12.02 cents a pound in New York.

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Congo Faces Crisis, Europeans Say, as UN Sends Humanitarian Aid

By Franz Wild

Nov. 3 (Bloomberg) -- Thousands of civilians displaced by fighting in the eastern Democratic Republic of Congo face a humanitarian crisis, European officials said, as the United Nations prepared to send aid to a rebel-held town today.

Tens of thousands of people need food, shelter, water and medicines in North Kivu province, British Foreign Secretary David Miliband and French Foreign Minister Bernard Kouchner said in a statement after visiting the region at the weekend.

``The crisis, even if averted in the short term, will return without a new, vigorous and united political effort,'' they said, after meeting in Dar es Salaam with Jakaya Kikwete, who is chairman of the African Union and president of Tanzania, to discuss the emergency.

Two months of fighting between the army and rebels, who say they are defending Congo's Tutsi minority, has forced 250,000 people from their homes, according to the UN. Aid agencies will deliver medical supplies and water today to Rutshuru, 70 kilometers (42 miles) north of the provincial capital, Goma, said Gloria Fernandez, the head of the UN Office for the Coordination of Humanitarian Affairs in Congo.

``The first priority for us is to restart activities at many medical centers,'' she told reporters in Goma yesterday.

The rebel National Congress for the Defense of the People, or CNDP, occupied Rutshuru on Oct. 28. The rebels, led by renegade General Laurent Nkunda, declared a cease-fire the following day.

Killed, Raped

North Kivu Governor Julien Paluku yesterday imposed a curfew on Goma, saying elements of the Congolese Armed Forces had killed, raped and looted in the city after fleeing the rebel offensive.

``Goma is not safe at the moment,'' he said in an interview. ``There are soldiers shooting around. People should stay home'' between 11 p.m. and 5 a.m.

The cease-fire must be bolstered and the Congolese government ``should take proper command of its forces,'' Miliband and Kouchner said in the statement. ``Regional states have a vital contribution to make.''

President Joseph Kabila has failed to establish peace in Congo's east, the origin of two civil wars between 1996 and 2003 in which 4 million people died. Six other African countries, including Rwanda and Uganda, sent armies to those conflicts.

Nkunda says he's defending ethnic Tutsis from a mainly Rwandan Hutu militia, whose leaders allegedly took part in Rwanda's 1994 genocide.

Kabila denies backing the militia and says the rebels are receiving support from the Tutsi-led government in neighboring Rwanda. Rwanda rejects the allegation.

The UN peacekeeping mission, which comprises about 16,475 soldiers, with the largest contributions from Pakistan, India, Uruguay and Bangladesh, should be strengthened, Miliband and Kouchner said.

To contact the reporter on this story: Franz Wild in Goma via Johannesburg at pmrichardson@bloomberg.net

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Gold May Fall for Fourth Straight Week as Dollar Strengthens

By Pham-Duy Nguyen

Nov. 3 (Bloomberg) -- Gold may fall for a fourth straight week on speculation the dollar will gain, eroding the appeal of the precious metal as an alternative investment.

Nine of 26 traders, investors and analysts surveyed from Mumbai to Chicago on Oct. 30 and Oct. 31 advised selling gold, which fell 1.7 percent last week to $718.20 an ounce in New York. Eight said to buy, and nine were neutral.

In October, gold plunged 18 percent, the most since March 1980, as the dollar rose 7.8 percent against a weighted basket of six major currencies. Gold is priced in dollars and often moves inversely to the currency.

Most analysts surveyed on Oct. 23 and Oct. 24 anticipated gold's decline last week. The survey has forecast prices accurately in 140 of 235 weeks, or 60 percent of the time.

Last week's survey results: Bullish: 8 Bearish: 9 Neutral: 9

To contact the reporter on this story: Pham-Duy Nguyen in Seattle at pnguyen@bloomberg.net.

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Crude Oil Falls on Speculation Slowing Growth Will Cut Demand

By Gavin Evans

Nov. 3 (Bloomberg) -- Crude oil fell in New York on signs slowing global economic growth is reducing demand for fuel.

Oil imports by South Korea, Asia's fourth-largest economy, fell 1.4 percent last month as growth slowed and the nation's falling currency increased fuel costs, the government said today. A report today will probably show manufacturing in the U.S., the world's largest oil consumer, fell to a seven-year low last month, according to a Bloomberg News survey of economists.

Crude oil for December delivery dropped as much as $1.13, or 1.7 percent, to $66.68 a barrel in after-hours electronic trading on the New York Mercantile Exchange. It was at $66.90 at 7:30 a.m. in Singapore.

The contract rose $1.85, or 2.8 percent, to $67.81 a barrel on Oct. 31, taking its gain for the week to 5.7 percent. Prices jumped late in the session as traders who had bet on falling gasoline and heating oil prices were forced to buy futures to limit losses before the contracts expired.

Oil's gain last week was the first in five weeks. Prices jumped 7.6 percent on Oct. 29 as shares surged and the dollar fell after the Federal Reserve cut interest rates to a 50-year low.

New York futures have tumbled 54 percent from the record $147.27 a barrel reached July 11, on signs the economic slowdown in the U.S. and Europe will spread to emerging markets, curbing fuel demand.

Brent crude oil for December settlement fell $1.02, or 1.6 percent, to $64.30 a barrel on London's ICE Futures Europe exchange today. The contract rose 2.5 on Oct. 31 and gained 5.3 percent for the week.

Production in Russia, the world's second-largest exporter, dropped for a 10th month in October as output from older fields declined faster than new wells were added, the nation's Energy Ministry said yesterday.

Iranian sales to Total SA, Europe's third-largest oil company, will fall by 70,000 barrels a day in line with cuts agreed by the Organization of Petroleum Exporting Countries last month, Oil Minister Ghalamhossein Nozari said yesterday.

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

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Corn, Soybeans May Rise as Banking Bailout Revives World Demand

By Jeff Wilson

Nov. 3 (Bloomberg) -- Corn and soybeans may rise for a second week on speculation that government interest-rate cuts and banking bailouts around the world will boost food and feed demand in 2009.

Twenty of 35 traders, advisers and grain merchants surveyed Oct. 31 from Tokyo to Chicago said corn would rise and 23 respondents forecast a soybean rally. Corn climbed 7.7 percent to $4.015 a bushel last week on the Chicago Board of Trade after falling to a one-year low. Soybeans advanced 7.6 percent to $9.33 a bushel. Corn is down 50 percent from an all-time high in June and soybeans have dropped 43 percent from a record in July.

Last week's gains were a surprise to the majority of respondents surveyed on Oct. 24. Since 2004, 56 percent of the surveys were correct for corn and 59 percent for soybeans.

Weekly results: Bullish on corn: 20 Bullish on soybeans: 23 Bearish on corn: 15 Bearish on soybeans: 12

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

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Australia Stocks: APN News, Atlas, BHP, James Hardie, Macmahon

By Ian C. Sayson

Nov. 3 (Bloomberg) -- The S&P/ASX 200 Index climbed 106.90 points, or 2.7 percent, to 4,124.90 as of 12:15 p.m. in Sydney. The measure advanced for the fourth day, its longest winning streak since Aug. 12. The S&P/ASX 200 Index futures contract due in December rose 2.5 percent to 4,137, while the All Ordinaries Index gained 105.10, or 2.6 percent, to 4,087.80.

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

Mining stocks: BHP Billiton Ltd. (BHP AU), the world's largest mining company, rose 90 cents, or 3.2 percent, to A$28.89 after a measure of metals prices completed its biggest weekly gain in more than two years. Rio Tinto Group (RIO AU), the third- biggest metals producer, climbed A$2.07, or 2.7 percent, to A$79.67, heading for a six-day, 24 percent advance.

A measure of six metals traded on the London Metal Exchange surged 7.8 percent last week, its sharpest weekly advance since June 2006. It's the measure's first weekly gain since Sept. 12.

Retailers: Wesfarmers Ltd. (WES AU), Australia's second- largest retailer, added 69 cents, or 3.2 percent, to A$22.16, set for its highest close since Oct. 21 after the government said consumers spent more on food and clothing. Woolworths Ltd. (WOW AU), the nation's biggest retailer, added 67 cents, or 2.4 percent, to A$28.47.

Australian retail sales rose 0.2 percent in September, the Bureau of Statistics said in Sydney today.

APN News & Media Ltd. (APN AU), the publisher of more than 100 newspapers in Australia and New Zealand, jumped 37 cents, or 15 percent, to A$2.78, heading for its biggest gain based on data that goes back to May 1992. The company appointed ABN Amro Holdings NV to advise on the possible stake sale by its largest shareholder, Independent News & Media Plc.

Atlas Iron Ltd. (AGO AU), the Australian iron ore company that's started production at its Pardoo mine, jumped 7 cents, or 9.6 percent, to 80 Australian cents after the company said it completed its first sale of iron ore shipment.

James Hardie Industries NV (JHX AU), the largest seller of home siding in the U.S., rose 28 cents, or 6.6 percent, to A$4.53, on course for its biggest gain since Oct. 1.

U.S. stocks rose, capping the biggest weekly gain since 1974, after JPMorgan Chase & Co. took steps to stem the housing crisis, bank lending rates declined and earnings from companies outside the financial industry expanded four times faster than the previous quarter. The Standard & Poor's 500 Index advanced 1.5 percent to 968.75.

Macmahon Holdings Ltd. (MAH AU), an Australian contract miner and construction company, gained 2.5 cents, or 3.4 percent, to 75.5 Australian cents. The stock was upgraded to ``buy'' from ``neutral'' by UBS AG.

Mt. Gibson Iron Ltd. (MGX AU), an Australian iron ore producer exporting to China, declined 2.5 cents, or 6.2 percent, to 38 Australian cents. The company said it agreed to sell A$162.5 million ($109 million) in shares to shareholders APAC Resources Ltd. and Shougang Concord International Enterprises Co. It also cut production forecast by 31 percent and said it will discount ore sold for the rest of the year.

Westpac Banking Corp. (WBC AU), Australia's second-biggest bank by market value, increased 66 cents, or 3.3 percent, to A$20.94, heading for its biggest gain since Oct. 20. The bank today announced the ``expected appointment'' of St. George Bank Ltd. (SGB AU) Chairman John Curtis as Westpac deputy chairman and the appointments of two St. George directors as Westpac directors. St George, which is merging with Westpac, added A$1.015, or 3.8 percent, to A$28.75.

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

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Acer, CapitaLand, Hana, Hyundai: Asia Ex-Japan Equity Preview

By Berni Moestafa

Nov. 3 (Bloomberg) -- The following companies may have unusual price changes today in Asia trading, excluding Japan. Stock symbols are in parentheses, and share prices are from the previous close, unless noted otherwise.

Acer Inc. (2353 TT): The world's third-largest computer supplier posted a 4 percent increase in third-quarter profit. Net income climbed to NT$3.04 billion ($92.7 million), it said. Acer fell 20 cents, or 0.5 percent, to NT42.94.

Cahya Mata Sarawak Bhd. (CMS MK): The Malaysian builder said it agreed to extend until Nov. 30 an agreement with Rio Tinto Group on the proposed design, construction and operation of an aluminum smelter in the eastern Sarawak state. A preliminary was signed in August 2007. Cahya rose 4 sen, or 3.6 percent, to 1.15 ringgit.

CapitaLand Ltd. (CAPL SP): Southeast Asia's largest property developer said third-quarter profit fell 26 percent to S$419.4 million ($283 million) after slowing economic growth hurt demand for homes in Singapore, China and Australia. CapitaLand was unchanged at S$2.85.

Dongkuk Steel Mill Co. (001230 KS): The supplier of about a third of the metal used by South Korean shipbuilders will shut one of its two ship-plate plants for maintenance work. The No.2 plant located in Pohang, south of Seoul, will go offline for a month from Nov. 1, the company said. Dongkuk Steel climbed 2,550, or 14 percent, to 20,500.

Evergreen Marine Corp. (2603 TT): Asia's biggest container- shipping line posted a worse-than-expected 94 percent decline in third-quarter profit as an economic slowdown damped world trade. Net income plunged to NT$291 million, Daphne Tsai, a public relations officer, said. Evergreen rose NT$1.1, or 6.9 percent, to NT$16.95.

Hana Financial Group Inc. (086790 KS) which controls South Korea's fourth-biggest bank, said it posted a net loss of 73.3 billion won ($56.7 million) in the third quarter. That compares with last year's net income of 392.7 billion won, it said. Hana Financial, fell 1,100 won, or 5.2 percent, to 20,000.

HTC Corp. (2498 TT): The world's largest maker of handsets that use Microsoft Corp.'s Windows operating system said it expects fourth-quarter sales to climb by about 25 percent. HTC gained NT$17, or 4.5 percent, to NT$393.5.

Hyundai Mobis Co. (012330 KS): South Korea's biggest auto- parts maker will buy affiliate Hyundai Autonet Co. in a deal valued at about 690 billion won to expand its range of electronic components. Hyundai Mobis declined 5,100 won, or 6.4 percent, to 74,900.

Hyundai Steel Co. (004020 KS): South Korea's second-largest maker of the metal will cut prices of construction products by as much as 9.8 percent after costs of scrap metal, a raw material, declined amid slowing demand. Hyundai rose 4,150 won, or 13 percent, to 36,600.

Kasikornbank Pcl (KBANK TB): Thailand's fourth-largest lender by assets expects its loan portfolio to grow by more than 17 percent this year, beating a company target, as customers borrow more to pay for higher raw-material costs. Kasikorn was unchanged at 50 baht.

Oilex Ltd. (OEX AU): The Australian oil and gas explorer said its Cambay-74 well in India is producing more than 500 barrels of oil a day. Oilex rose 5.5 cents, or 10 percent, to 59.5 Australian cents.

PT Aneka Tambang (ANTM IJ): Indonesia's second-largest publicly listed metal producer posted a 58 percent drop in profit as nickel prices declined and production costs surged. Net income fell to 1.62 trillion rupiah ($149 million), it said. Aneka added 30 rupiah, or 3 percent, to 1,040.

PT Timah (TINS IJ): The world's second-biggest tin miner and refiner said profit fell 21 percent to 379.9 billion rupiah as it sold less of the metal and production costs surged. Timah added 80 rupiah, or 7.4 percent, to 1,160.

Quanta Computer Inc. (2382 TT): The world's largest contract manufacturer of notebook computers reported an unexpected increase in third-quarter profit, helped by a one-time foreign- exchange gain. Net income rose to NT$7.21 billion, it said. Quanta advanced 25 cents, or 0.7 percent, to NT34.4.

Shinhan Financial Group Co. (055550 KS): The company which controls South Korea's third-biggest bank posted a bigger-than- expected 38 percent drop in third-quarter profit as it set aside more provisions against bad loans. Net income fell to 323.3 billion won, it said. Shinhan fell 1,700 won, or 5.2 percent, to 31,300.

To contact the reporter on this story: Berni Moestafa in Jakarta at bmoestafa@bloomberg.net

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Asian Stocks Advance for Fifth Day; James Hardie, BHP Climb

By Chua Kong Ho

Nov. 3 (Bloomberg) -- Asian stocks rose, extending last week's rally, on speculation economic fallout from the global credit crisis can be contained after JPMorgan Chase & Co. said it won't begin new foreclosure proceedings on some U.S. loans.

Westfield Group, the world's biggest shopping mall, gained 2.1 percent, while James Hardie Industries NV, the biggest seller of home siding in the U.S., rose the most in a month as Australia's central bank pumped almost $1 billion into money markets. BHP Billiton Ltd., the world's largest mining company, advanced 3.6 percent after a measure of metals prices completed its biggest weekly gain in more than two years. Korean Air Lines Co. added 1.5 percent as oil declined.

The MSCI Asia Pacific excluding Japan Index rose 4.07, or 1.7 percent, to 247.76 as of 8:12 a.m. in Hong Kong, a fifth- straight advance. All of its 10 industry groups advanced, with financial and raw-material companies posting the biggest gains.

Australia's S&P/ASX 200 Index added 2.8 percent. South Korea's Kospi Index climbed 2.3 percent. Japan's markets are shut for a holiday today.

The MSCI index of Asian stocks that includes Japan rallied 6.9 percent last week, the most in more than a year, as central bank steps to ease credit markets spurred demand for the region's shares, which were at their cheapest level in at least eight years.

The gauge still lost 20 percent in October, part of a sell- off that erased more than $9.5 trillion from the value of stocks worldwide, as credit-related losses and writedowns by financial firms approached $700 billion.

To contact the reporter for this story: Chua Kong Ho in Shanghai at kchua6@bloomberg.net

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Persian Gulf Shares Rise on Rate Cuts; Dubai Investments Climbs

By Haris Anwar

Nov. 2 (Bloomberg) -- Persian Gulf stocks gained, led by financial companies, after Dubai Investments PJSC said profit more than doubled and signs grew that the global credit crisis is easing following interest-rate cuts.

Dubai Investments, which owns stakes in more than 40 companies, climbed the most in two weeks. Bank Muscat SAOG posted the biggest surge in more than two weeks. Zain rose for a fourth day as it more than doubled its stake in its Iraqi unit.

The Dubai Financial Market General Index added 0.4 percent to 2,955.11, after trading at its cheapest since at least February 2007. The Abu Dhabi Securities Exchange General Index gained 1.5 percent and Oman's Muscat Securities Market 30 Index jumped 6.5 percent, the most since Oct. 14. Oman's measure slumped 27 percent last month.

``Risk appetite is increasing after last week's rate cuts,'' Sunil Dhall, vice-president at Gulf Baader Capital Markets SAOC, said in a telephone interview from Oman. ``The regional markets were already oversold, so what we're seeing is a rebound that might continue for some time.''

Saudi Arabia, Kuwait and Bahrain lowered key lending rates as the crisis gave Gulf central banks more flexibility in following U.S. Federal Reserve cuts. Gulf states tend to follow U.S. rate decisions to maintain their currencies' pegs to the dollar.

U.S. stocks staged their steepest weekly surge in 34 years after the Fed's interest-rate cut and signs the credit crisis is ebbing boosted equities. The Standard & Poor's 500 Index climbed 1.5 percent on Oct. 31, and 10 percent during the week.

Libor Drops

A measure of borrowing costs between banks dropped on Oct. 31, capping the first monthly decline since May, after central banks provided cash and cut interest rates. The London interbank offered rate, or Libor, for three month loans in dollars slid 0.16 point to 3.03 percent, the 15th consecutive drop, according to the British Bankers' Association.

Before today's gain, Dubai's benchmark stock index was valued at 7.14 times the earnings of its 29 companies, the lowest level since at least February 2007, data compiled by Bloomberg show. Abu Dhabi's index now trades at 8.09 and Oman's measure at 5.98 times profit. The three are cheaper than the MSCI Emerging Markets Index, which Oct. 31 was valued at 8.24 times profit.

In Qatar, the DSM 20 Index surged 5.2 percent, the Kuwait Stock Exchange Index rose 0.8 percent and the Bahrain All Share Index added 0.5 percent. Saudi Arabia's Tadawul All Share Index declined 1.2 percent.

Dubai Investments Gains

Dubai Investments gained 2.6 percent to 1.96 dirhams. Net income for the period climbed to 634.8 million dirhams ($173 million) as property sales increased.

Bank Muscat, Oman's largest lender, soared 7 percent to 0.963 rial, the biggest one-day advance since Oct. 14.

Zain advanced 1.7 percent to 1,180 fils. The Kuwaiti phone company with operations in 22 countries in the Middle East and Africa raised its stake in its Iraqi unit to 62 percent from 30 percent.

The following stocks also rose or fell in the region. Stock symbols are in parentheses after company names:

Abu Dhabi National Takaful Co. (TKFL UH), a United Arab Emirates-based Islamic insurance and reinsurance provider, surged 7.3 percent to 8.69 dirhams after it posted a third- quarter profit of 3.25 million dirhams compared with a loss of 277,465 dirhams in the year-earlier period.

Emirates Integrated Telecommunications Co. (DU UH), known as Du, rose 0.7 percent to 4.17 dirhams. The U.A.E.-based company beat estimates and posted its first profit as revenue rose after it added new subscribers.

Ithmaar Bank BSC (ITHMR BI), a Bahrain-based Islamic lender, climbed 8.9 percent, the most since Feb. 5, to 49 cents after announcing plans to set up a $6 billion fund to invest in Turkey with Abu Dhabi Investment House and Gulf Finance House EC.

To contact the reporter on this story: Haris Anwar in Dubai on Hanwar2@bloomberg.net

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Boeing, Danaos, Rowan, Societe Generale: U.S. Equity Preview

By Whitney Kisling

Nov. 2 (Bloomberg) -- The following companies may have unusual price changes in U.S. trading tomorrow. Stock symbols are in parentheses, and share prices are as of 5:10 p.m. in New York on Oct. 31, unless otherwise specified.

Standard & Poor's 500 Index futures expiring in December rose 5.80, or 0.6 percent, to 967.30. Dow Jones Industrial Average futures gained 72, or 0.8 percent, to 9,298. Nasdaq-100 Index futures lost 20.25, or 1.5 percent, to 1,324.75.

Boeing Co. (BA US): The planemaker's machinists began returning to work today after accepting a contract with 15 percent raises, ending a strike that had idled factories for eight weeks and cut profit by about $10.3 million a day. Boeing stock rose $1.72, or 3.4 percent, to $52.42.

Danaos Corp. (DAC US) gained 34 cents, or 4 percent, to $8.68. The largest publicly-traded container shipper in the U.S. posted third-quarter profit excluding some items of 48 cents a share, beating the average analysts' estimate by 6.7 percent. The company also said it added more vessels to its fleet.

JPMorgan Chase & Co. (JPM US): The banking company, which has bought Washington Mutual Inc. and Bear Stearns Cos. this year, may post a 50 percent share price increase once the economy improves, Barron's reported, without citing anyone. JPMorgan shares gained $3.63, or 9.7 percent, on Oct. 31 to $41.25.

Molson Coors Brewing Co. (TAP US): rose 4.3 percent to $37.36 in regular trading. The brewer may rise as much as 50 percent to $56 during the next 12 months as its venture with SABMiller Plc helps the company gain market share in the U.S., Barron's said, citing Kim Scott, who manages the Ivy Mid-Cap Growth Fund.

NewBridge Bancorp. (NBBC US) climbed 2.7 percent to $3.77 in regular trading. The bank holding company suspended its cash dividend after posting a loss of 10 cents a share for the third quarter. The company also applied for $52 million under the U.S. Treasury's TARP program.

Rowan Cos. (RDC US) fell 2.8 percent to $18.14 in regular trading. The oil and natural gas driller that builds its own equipment said Chief Executive Officer Daniel F. McNease will retire at the end of the year.

Societe Generale SA (SCGLF US): France's second-largest bank by market value, may rise at least 20 percent as credit markets worldwide stabilize, Barron's reported, without citing anyone. The bank's U.S. shares rose $5.20, or 11 percent, to $51.40.

To contact the reporter on this story: Whitney Kisling in New York at wkisling@bloomberg.net

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Boeing Machinists to Return to Work Today, Ending 8-Week Strike

By Susanna Ray

Nov. 2 (Bloomberg) -- Boeing Co. machinists start returning to work today after accepting a contract with 15 percent raises, ending a strike that idled the planemaker's factories for eight weeks and cut profit by about $10.3 million a day.

The four-year contract was approved last night by 74 percent of the voters, the International Association of Machinists and Aerospace Workers said in Seattle, home to Chicago-based Boeing's manufacturing hub. The first workers are scheduled to return late today with the start of the third shift.

``We're looking forward to having our team back together to resume the work of building airplanes for our customers,'' said Scott Carson, Boeing's top commercial-planes executive.

The world's No. 2 commercial-jet builder may need until December to get assembly lines back up to speed, said Joseph Campbell, an analyst at Barclays Capital in New York. The strike by the union's 27,000 Boeing members in Washington state, Oregon and Kansas started Sept. 6, costing Boeing about $100 million in lost revenue each day and further delaying the 787 Dreamliner.

``Most of it eventually will be made good, though it'll take a year or more,'' said Richard Aboulafia, an analyst with aviation consulting firm Teal Group in Fairfax, Virginia. No airlines canceled their orders because of the strike, so ``those customers will get their jets and they will pay for them.''

Boeing has said it will give a new profit forecast and an update on the 787 program after workers return and it can assess the full impact of the stoppage. The company had been building about 40 planes a month to fill a record $276 billion order backlog, boosted by airlines eager to save on fuel by using newer models. That's one reason the union insisted on a bigger share of the profits for its members.

Boeing Shares

The company's shares have fallen 21 percent to $52.42 in New York Stock Exchange trading since the Sept. 3 vote to strike. During that time the global credit crisis ballooned, U.S. gross domestic product contracted and the two-decade expansion in consumer spending came to an end. The walkout was blamed in part for a September decline in U.S. industrial production that was the biggest since 1974.

``There's over seven years of airplanes to be built, and the situation with the financial market didn't change that,'' IAM District 751 President Tom Wroblewski said last night. ``In fact, while we were on strike they even sold more airplanes.''

The 57-day walkout was the third-longest of seven in the union's 73-year history. Workers who averaged $54,000 a year in salary had to get by on union strike pay of $150 a week.

57-Day Walkout

``I think the union's out of touch with reality'' and shouldn't have gone on strike, said Don Icenogle, 45, an inspector at the plane-development center in Seattle who voted ``yes'' both times. ``This isn't that different a contract from the first one, and yet 57 days later it was approved.''

The machinists won raises of 15 percent over four years, bonuses totaling at least $8,000 in the next three years and increased pension payments. In addition, they won't have to pay more for their health-care costs as Boeing had wanted. The new contract runs four years instead of the traditional three, giving Boeing an additional year of labor peace.

Boeing and the union compromised on key issues involving the use of contract workers, which the planemaker said are needed to give it flexibility as conditions change and the union said threaten its members' jobs. Machinists will take back some of the parts deliveries in factories that had been done by suppliers; maintenance workers won't be laid off if subcontractors doing similar jobs are still working; and the union can bid for work Boeing is considering moving to a different plant.

Ramping Back Up

Suppliers including Spirit AeroSystems Holdings Inc. cut hours, laid off workers or reduced earnings projections when they had to slow or halt parts shipments to Boeing. Spirit has said it will need 90 days to return to normal production.

While the machinists will eventually catch up in building models that are already in production, the 787 may be further delayed by the strike. The plane was already at least 15 months behind schedule, because of parts shortages, a redesign and problems with suppliers not doing the work expected. Boeing has said the walkout means a ``day-for-day'' delay.

Goodrich Corp., which makes brakes, engine housings and other parts for the 787, said Oct. 23 that the strike probably would push the plane's entry into service back to 2010.

The machinists' approval on the contract doesn't end Boeing's labor issues. The Society of Professional Engineering Employees in Aerospace began negotiations with Boeing this week for its 20,300 members, who have also threatened to strike once their contract ends Dec. 1.

``SPEEA's contract is coming up and Boeing just wanted us to get back to work, so they changed the language just enough to make people think things are better, but nothing's changed,'' said Dorothy Hertel, who voted against the new contract. As a quality-assurance inspector on the 787 assembly line, the 23- year Boeing worker said she hoped for more limitations on outsourcing in the new agreement.

To contact the reporter on this story: Susanna Ray in Seattle at sray7@bloomberg.net.

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Gordon Brown Asks Gulf Wealth Funds to Invest in U.K.

By Gonzalo Vina

Nov. 2 (Bloomberg) -- U.K. Prime Minister Gordon Brown urged sovereign wealth funds from the Persian Gulf to invest in British companies needing more financing because of the credit crunch.

Brown arrived in Riyadh late yesterday with Business Secretary Peter Mandelson, Energy Secretary Ed Miliband and a delegation of business leaders to encourage funding from cash- rich oil producers.

``The Gulf states will have a vital role to play in agreeing the plans to get the world economy moving again,'' Brown told reporters before arriving in Riyadh. They ``are an increasingly important source of inward investment to the U.K. As long as they play by our rules and operate in a commercial manner, we welcome investment from sovereign wealth funds.''

Barclays Plc, Britain's second-biggest bank, earlier this week said it would raise 7.3 billion pounds ($11.8 billion) by selling securities to investors including funds in Abu Dhabi and Qatar. Sheikh Mansour Bin Zayed Al Nahyan, a member of Abu Dhabi's royal family, will become its biggest shareholder.

Sheikh Mansour will collect interest payments of as much as 14 percent and control 16.3 percent of the London-based bank after putting up 5 billion pounds ($8 billion), the company said in a statement yesterday. Barclays fell 13 percent after analysts at Sanford C. Bernstein & Co. said the bank was paying a ``fairly expensive'' price for the capital injection.

Energy Projects

Brown's visit coincides with the signing of a number of deals in which Gulf states will invest in renewable energy projects in the U.K.

``Gulf oil and gas revenues have provided masses of finance for the region, but will now also be used to help kick-start the British green energy revolution,'' Miliband told reporters. ``Gulf states recognize the U.K., too, has natural assets to offer investment opportunities for them.''

BP Plc Chief Executive Officer Tony Hayward, Centrica Plc CEO Sam Laidlaw and Royal Dutch Shell Executive Director Malcolm Brinded were among business leaders accompanying Brown.

The initiative comes at a time when oil-rich states are suffering from a plunge in oil prices. Brent crude futures prices have fallen by more than half from a record of more than $147 in July.

Political Interference

Mandelson, a former European Union trade commissioner, said he wants more money from the region to go to the U.K. and that he didn't anticipate difficulties with political interference.

``We haven't had a problem with sovereign wealth funds in the past, so I don't see why it should be a problem in the future,'' he said in an interview. ``They want to generate a good return. They are the first to steer clear of politics.''

Separately, Brown reiterated the need for gulf states to boost the International Monetary Fund's $250 billion cash supply by ``hundreds of billions of dollars.''

``If we are to stop the spread of the financial crisis, we need a better global insurance policy to help distressed economies,'' Brown said. ``That is why I have called for more resources for the IMF.''

Countries including Saudi Arabia will probably contribute more to the IMF ``so we can have a bigger fund worldwide,'' Brown said. ``I think people want to invest both in helping the world get through this very difficult period of time, but also I think people want to work with us so we are less dependent on oil and have more stability in oil prices.''

Arab nations and china haven't been represented enough on international bodies such as the IMF, he said.

To contact the reporters on this story: Gonzalo Vina in Riyahd at gvina@bloomberg.net

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