Japan's Economy Shrinks 0.4%, Confirming Recession

By Jason Clenfield

Nov. 17 (Bloomberg) -- Japan's economy, the world's second largest, unexpectedly shrank in the third quarter, confirming it entered the first recession since 2001 as companies cut spending.

Gross domestic product fell an annualized 0.4 percent in the three months ended Sept. 30, the Cabinet Office said today in Tokyo. Economists predicted the economy would grow 0.1 percent after contracting a revised 3.7 percent in the previous period.

The slowdown that last month forced Prime Minister Taro Aso to propose a stimulus package is likely to worsen as export demand weakens and companies respond with investment cuts and layoffs. Toyota Motor Corp. and Canon Inc. slashed profit forecasts in the past month as U.S. consumers spend less and the yen's rise against the dollar erodes the value of sales.

``It's only going to get worse,'' said Masamichi Adachi, senior economist at JPMorgan Chase & Co. in Tokyo. ``Japan may be entering its deepest recession in a decade as the global financial crisis cools demand overseas.''

The yen traded at 96.24 per dollar as of 9:46 a.m. in Tokyo from 96.09 before the report was released.

The economy last contracted over two consecutive quarters -- the technical definition of a recession -- in 2001. Reports last week showed Europe and Germany are also in recessions.

Leaders from the Group of 20 nations this weekend agreed to take a ``broader policy response'' by using interest-rate cuts and fiscal stimulus to shore up the weakening global economy.

Companies Cut Back

Quarter-on-quarter, Japan's economy shrank 0.1 percent, today's report showed. Capital spending fell 1.7 percent from the previous three months, compared with economists' expectations of a 2 percent drop.

Toyota, which makes more than three-quarters of its sales abroad, forecast profit will fall this fiscal year by almost 70 percent. The carmaker will fire 3,000 workers by March, and the Nikkei newspaper reported this month that it will delay adding capacity at a domestic plant that makes Lexus sedans.

``The economy is still so sensitive to the global business cycle. That's the problem,'' said Hiromichi Shirakawa, chief Japan economist at Credit Suisse Group AG in Tokyo. ``A long as the global economy keeps sinking, Japan will probably experience a deep recession.''

Net exports subtracted 0.2 percentage point from growth after imports outweighed an increase in shipments abroad. Exports rose 0.7 percent, less than the 1.2 percent expected. Imports climbed 1.9 percent as oil surged to a record in the quarter. Economists predicted a 1.5 percent gain.

Bank of Japan

The Bank of Japan last month cut its key interest rate to 0.3 percent, the first reduction in seven years. Governor Masaaki Shirakawa and his colleagues said the global downturn and the yen's 10 percent advance against the dollar since September have created a ``severe'' earnings environment for Japanese companies.

Still, Japan will probably suffer less than its biggest counterparts after companies shed debt and streamlined labor forces following the bursting of the property and asset bubble in the early 1990s. Asia's biggest economy will shrink 0.1 percent next year, according to the Organization for Economic Cooperation and Development, less than the 0.9 percent and 0.5 percent contractions in the U.S. and Europe.

Consumers are getting some relief as inflation abates and Prime Minister Aso prepares to provide households with at least 12,000 yen ($125) each as part of a 5 trillion yen stimulus plan. Consumer spending increased 0.3 percent last quarter, more than the 0.1 percent economists expected, today's report showed.

Not a Good Sign

``Though consumer spending was a positive figure, it's difficult to take it as a good sign because the figure was boosted by seasonal factors such as the hot summer and the Olympics,'' said Junko Nishioka, an economist at RBS Securities Japan Ltd. in Tokyo. ``Consumption will probably turn negative in the fourth quarter.''

The ratio of jobs to applicants has fallen for eight months and the deteriorating profit outlook for companies is also putting pressure on wages. Winter bonuses, which typically account for about 10 percent of a fulltime worker's annual pay, will fall 2.9 percent this year, the Nikkei reported last week.

The GDP deflator, a broad measure of price changes, fell 1.6 percent from the same period a year earlier, today's report showed, compared with economists' expectations for a 1.7 percent drop. The deflator fell 1.4 percent in the previous quarter.

To contact the reporter on this story: Jason Clenfield in Tokyo at jclenfield@bloomberg.net

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Babcock & Brown Sells Enersis Wind Assets to Cut Debt

By Angela Macdonald-Smith and Stuart Kelly

Nov. 17 (Bloomberg) -- Babcock & Brown Ltd., the Australian asset manager that's selling assets to repay debt, sold its Enersis wind energy business in Portugal for about 1.15 billion euros ($1.4 billion) to investors led by Magnum Capital.

Babcock & Brown, which owns Enersis jointly with its wind energy fund, received net proceeds of A$285.8 million ($182 million) from the sale of its 50 percent stake, the Sydney-based company said today in a statement to the Australian Stock Exchange.

Babcock slumped to a record low in Sydney trading last week, and has lost more than half its value since Nov. 6, when ABN Amro Holding NV analyst John Heagerty said Babcock may breach loan agreements because the global credit crisis has made selling assets harder.

The proceeds from the sale will be used to help pay A$9.6 billion of debt, and doesn't form part of the A$400 million that the company said in June it will pay its bankers, Babcock spokeswoman Erica Borgelt said today.

Babcock is competing with distressed asset sellers from Detroit to Brisbane to avoid the fate of Allco Finance Group Ltd. and ABC Learning Centres Ltd., two Australian companies that were placed in the hands of outside managers this month. Babcock & Brown Infrastructure Group, one of Babcock's 12 publicly traded funds, said Nov. 5 that divestments are ``extremely difficult.''

France, Greece

Babcock in December 2005 bought the Enersis project for 490 million euros and then sold half to affiliate Babcock & Brown Wind Partners. The company plans to sell its remaining stakes in wind assets in Portugal, France, Greece and Germany, it said today.

Babcock & Brown Wind Partners said in a separate statement today it will receive net cash proceeds of about A$274 million from the sale of its 50 percent stake, on which it made a loss of A$11.7 million.

Magnum, based in Madrid and Lisbon, will contribute 65 percent of the equity in the deal, the buyout fund started by former chief executive officers of Banco Santander SA and EDP- Energias de Portugal SA. said in a statement yesterday. The rest is funded by mainly Portuguese partners including Espirito Santo Capital, Banco Espirito Santo SA's private equity firm.

Babcock, founded in 1977, is the worst performer on the MSCI AC Asia Pacific Index of 988 companies this year, tumbling 98 percent. Chief Executive Officer Michael Larkin was promoted to replace Phil Green in August after the company posted its first drop in profit.

Babcock agreed to pursue asset sales to cut debt on June 30 after its market value slumped below a threshold that allowed bankers to start reviewing the company. It was also forced to pay an additional A$10 million a year in interest.

Babcock's interest cover ratio -- a measure of its ability to repay debt -- was 5.3 at the end of June, the company said. That exceeds the 3 times ratio required by its bankers.

To contact the reporter on this story: Angela Macdonald-Smith in Sydney at amacdonaldsm@bloomberg.netStuart Kelly in Sydney skelly22@bloomberg.net

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Obama Cabinet Must Balance Gravitas, New Faces: Albert R. Hunt

Commentary by Albert R. Hunt

Nov. 17 (Bloomberg) -- Barack Obama has had an almost perfect two weeks. He will make mistakes in the transition; everyone does. He especially needs to walk a delicate line as he forms a new government.

Since Nov. 4, though, his tone, balance, appointments, priorities and few policy actions have been on key. Small missteps, such as a careless remark abut Nancy Reagan, were rectified immediately.

It is striking how well prepared this political newcomer is. What John McCain called his arrogant presumptiveness during his campaign is turning into a valuable strength in the most dicey transition since 1932, one that didn't go well.

If he taps Hillary Clinton as his secretary of state, it will be a carefully considered choice.

On policy and politics, Obama has been collegial with the Bush administration without being collaborative. He is neither committing his administration to policies it may wish to change nor appearing to undercut the current administration.

Obama has talked to foreign leaders but has resisted entreaties to get involved in early policy direction.

Smartly, he is filling his White House staff before the Cabinet. Bill Clinton did it the other way and had a chaotic first two years. The White House staff is the engine that drives a presidency.

The selection of the tough, and sometimes combative, Chicago congressman, Rahm Emanuel, to be chief of staff was enlightened. Emanuel can deliver bad news, often with relish, understands the interplay of politics and policy as well as anybody in Washington, and knows how to play Congress.

Influential Figures

Fears of Emanuel achieving Karl Rove-type omnipotence are misplaced. He has a wider range of experience than Rove; there are other equally influential White House figures, including chief political strategist and Emanuel friend David Axelrod and Valerie Jarrett, the president-elect's close confidant; and, more than his predecessor, Obama, 47, is a secure and confident man who actively seeks a diverse set of views.

Still, the appointments over the next several weeks will establish the early persona of the Obama presidency.

Two dominant realities are in conflict. One, he promised change, not just from the Bush administration but from the ``decades of broken politics in Washington.'' He faces the most perilous situations of any new president since Franklin D. Roosevelt, with a financial crisis and two wars, conditions that demand experienced judgment.

He wants to assemble a group that has gravitas and is fresh, one that reflects the diversity of his political appeal and the depth and knowledge he promised to bring to government. Insiders and outsiders.

The large Obama-Biden transition team illustrates these conflicts. There are a lot of able people who understand governance.

Smart Retreads

Collectively, they also look very much like the Clinton government-in-exile. You need smart retreads; that picture doesn't look like a group that wishes to change ``decades of broken politics.''

Some of the tough trade-offs and considerations are evident in weighing whom to tap for his most important Cabinet positions, starting with Treasury.

In a financial crisis, there's no one who would bring more expertise and experience than former Treasury Secretary Lawrence Summers, 53. The complaints from a few women's groups about a careless comment he made several years ago are dismissed as frivolous by the Obama insiders, as they should be.

The only drawback against Summers, and why some believe he's more likely to be tapped for special assignments and as a possible Federal Reserve Board chairman-in-waiting, is that picking the former secretary for the same job isn't synonymous with change.

Youthful Geithner

That's why 47-year-old New York Federal Reserve Chairman Timothy Geithner, whose acumen is as striking as his youthful appearance, is a more attractive alternative to some Obama advisers. A possible middle ground that has been advanced to the president-elect is the towering presence of 81-year-old former Federal Reserve Chairman Paul Volcker, with Geithner as his deputy and heir apparent.

One thing is clear: Considering such heavyweights as Summers, Geithner and Volcker, any other choice would send a very disappointing signal.

For secretary of state, Senator John Kerry of Massachusetts and New Mexico's Governor Bill Richardson are lobbying for the job. Neither would be a very uplifting selection.

Nunn, Holbrooke

Two who would be are totally different. Sam Nunn, the former chairman of the Senate Armed Services Committee, personifies solidity and respected judgment; if there's a crisis with Russia or China, there's no one you'd rather have in place. Former United Nations Ambassador Richard Holbrooke would bring unsurpassed creativity and new thinking into a world that looks a lot different than it did 10 years ago.

Over the past couple of days the odds-on favorite for this post has become Hillary Clinton. She'd be a good choice -- assuming her husband is with the program -- and it speaks volumes of Obama's confidence and reach. He is inspired by Doris Kearns Goodwin's ``Team of Rivals,'' recounting how Lincoln -- with only one term in Congress -- surrounded himself in key posts with the heavyweights he'd beaten. His secretary of state was William Seward, the senator from New York.

For attorney general, Obama supporter Eric Holder is a frontrunner.

Marc Rich Pardon

There is a problem: As deputy attorney general in 2001, Holder failed to oppose Bill Clinton's infamous pardon of Marc Rich, the tax cheat and fugitive financier. Arizona Governor Janet Napolitano, a former prosecutor 2,000 miles away from Washington, doesn't have any insider baggage.

Two months from today, as these men and women undertake the daunting challenges ahead, it'll be instructive to look at the top 50 appointments -- secretaries and deputies, the top dozen White House appointments and a few others -- and apply two tests: is this a truly talented and diverse collection of the best people and are half of these men and women new and fresh, not retreads of the 1990s?

If Barack Obama threads that delicate needle, he'll be ready to govern.

(Albert R. Hunt is the executive editor for Washington at Bloomberg News. The opinions expressed are his own.)

To contact the writer of this column: Albert R. Hunt in Washington at ahunt1@bloomberg.net

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Pakistan IMF Bailout May Prompt Higher Credit Rating, ADB Says

By Khalid Qayum

Nov. 17 (Bloomberg) -- Pakistan's $7.6 billion rescue from the International Monetary Fund may help the nation overcome a ``crisis of confidence'' and improve its debt rating, according to the Asian Development Bank.

``There is no reason why it should not'' lead to an upgrade in Pakistan's credit rating, ADB Managing Director Rajat Nag said in an interview in New Delhi yesterday. ``The IMF program will bolster confidence and I am optimistic Pakistan will be able to undertake the reforms required for the bailout package.''

Pakistan was forced to seek assistance from the IMF after its foreign-exchange reserves shrank 75 percent in the past year to $3.5 billion, raising concern about its ability to repay debt. Ahead of the IMF loan, central bank Governor Shamshad Akhtar last week made the ``toughest decision'' of her life and increased the benchmark interest rate to 15 percent from 13 percent.

The IMF loan may help Pakistan win additional aid from a group of other lenders and donor nations, including the U.S., U.K., China and Saudi Arabia, due to meet today in Abu Dhabi.

``The `Friends of Pakistan' group wanted us to get an IMF endorsement for our economic program,'' Shaukat Tarin, the de facto finance minister, said in Karachi Nov. 15. The IMF loan ``will give confidence to investors, and it will help us in seeking more aid.''

Pakistan, a center in the war on terrorism, has been forced to seek IMF assistance after its foreign reserves dwindled to the equivalent of one month's imports. Hungary, Iceland and Ukraine also have negotiated IMF packages in recent weeks as the global economic crisis has radiated beyond the financial sector.

`Global Setting'

``It is important for the Pakistan economy to do well, not only for the region, but also in the current global setting,'' said the ADB's Nag.

Pakistan left its last IMF program in 2004 with a credit rating from Standard & Poor's of B+, four levels below investment grade. S&P on Nov. 14, one day before the latest IMF loan was announced, cut the nation's rating to CCC, citing a risk of default on external debt payments.

Government debt from Pakistan is perceived by investors as the second-riskiest in the world after Argentina. Credit-default swaps on Pakistan's $2.7 billion of dollar-denominated bonds outstanding are trading at 2,521.5 basis points, according to CMA Datavision. That means it costs $2.5 million annually to protect $10 million of the country's debt from default for five years.

The State Bank of Pakistan increased its benchmark interest rate by 2 percentage points, the most in more than a decade, on Nov. 12, citing inflation that reached a 30-year high of 25 percent in October.

Budget Deficit

``The IMF counseled us to increase the key interest rate to curb inflation,'' Tarin said. ``The IMF didn't give us any conditions different from our economic stabilization program.''

The government of President Asif Ali Zardari aims to reduce the budget deficit to 4.3 percent of gross domestic product in the fiscal year that ends June 2009, from 7.4 percent last year. It also has pledged there will be no net borrowing by the central bank in the fiscal year.

The IMF regards Pakistan's budget and borrowing targets as ``realistic and achievable provided we show discipline and determination,'' Tarin said.

The Fund's board will vote on the loan program ``shortly,'' Managing Director Dominique Strauss-Kahn said in an Nov. 15 statement in Washington.

The IMF funds would be available over 23 months and have an interest rate of 3.5 percent to 4.5 percent, Tarin said. They will have to be repaid by 2016.

Political Turmoil

Pakistan's economic crisis mounted after Zardari's Pakistan Peoples Party-led government, which came to power in March, was paralyzed for almost six months by political wrangling. The rupee in October plunged to an all-time low and the balance of payments deficit in the first three months of the fiscal year started July 1 widened to $3.95 billion, from $2.27 billion a year earlier. The deficit reached a record $14 billion last year.

Pakistan's economy has ``deteriorated significantly'' and growth may slow to a six-year low, the IMF said in an Oct. 20 report. Growth is likely to weaken to 3.5 percent in the current fiscal year from 5.8 percent last year, the IMF said. The government forecasts the economy will expand 5.5 percent in the fiscal year.

Pakistan expects to get the ``maximum'' amount of funds upfront from the IMF to meet $3.5 billion to $4.5 billion of needs this fiscal year, Tarin said. The country may receive the first installment this month, he said.

To contact the reporter on this story: Khalid Qayum in Islamabad at kqayum@bloomberg.net.

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Korean Won Slides to Three-Week Low as Economy Concerns Mount

By Kim Kyoungwha

Nov. 17 (Bloomberg) -- South Korea's won fell to the lowest in almost three weeks against the dollar after a government report indicated consumer spending is weakening, fanning concern that growth will slump in Asia's fourth-largest economy.

The currency and the Kospi stock index both dropped for a fifth day as overseas investors sold more Korean shares than they bought. The International Monetary Fund may cut its 2009 economic growth forecast for the nation to less than 3 percent from 3.5 percent, Yonhap News reported today, citing President Lee Myung Bak.

``The won will find it difficult to stage a meaningful turnaround given that the economy is cooling fast,'' said Chun Chong Woo, an economist at Standard Chartered First Bank Korea Ltd. in Seoul. ``Risk aversion is still prevalent, damping demand for emerging-market assets.''

The won fell 1.5 percent to 1,421.50 per dollar at 9:47 a.m. in Seoul, according to Seoul Money Brokerage Services Ltd. The currency dropped 34 percent so far this year, the biggest loss among the 10 most-traded Asian currencies outside of Japan.

Sales at the country's three biggest discount chains declined 0.7 percent from a year earlier last month, after tumbling 9.2 percent in September, the Ministry of Knowledge Economy said in Gwacheon today. Department store sales were unchanged, following a 0.3 percent drop.

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

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Australian, N.Z. Dollars Slide on U.S. Economy, G-20 Inaction

By Candice Zachariahs

Nov. 17 (Bloomberg) -- The Australian and New Zealand dollars fell on concern the U.S. economic slump will push the world into a recession and that leaders from the Group of 20 nations may not be able to revive growth.

The Group of 20 called for a ``broader policy response'' including additional interest-rate cuts and fiscal stimulus, in a statement on Nov. 15 at the end of a two-day meeting in Washington. The currencies were also lower as a record drop in U.S. retail sales in October increased concern that corporate earnings will deteriorate as the world's largest economy slows.

The G-20 talks are ``certainly a positive step, but it's going to be some time before we see the impact of the weekend's meeting in Washington flow through to some tangible actions,'' said Mike Symonds, head of currency trading at Bank of New Zealand Ltd. in Wellington. The Australian and New Zealand dollars ``will trade lower overall in the next 24 to 48 hours.''

Australia's currency fell 1.2 percent to 64.02 U.S. cents as of 11:43 a.m. in Sydney from 64.81 cents late in New York last week. The currency declined 2.2 percent to 61.61 yen.

New Zealand's dollar was 0.5 percent weaker at 55.03 U.S. cents from 55.30 cents in New York last week. It bought 52.95 yen from 53.71.

Australia's dollar extended declines as third-quarter retail sales rose less than economists had estimated.

Retail sales, adjusted to remove the effect of inflation, increased 0.1 percent from the June quarter when they fell 0.2 percent, the Bureau of Statistics said in Sydney today. The median forecast of 15 economists surveyed by Bloomberg New was for a 0.4 percent gain.

U.S. Economy

The South Pacific nations' currencies fell after the G-20 meeting set a March deadline for recommendations on strengthening accounting standards, derivatives markets and oversight of hedge funds and debt-rating companies. The Group promised to meet again before May.

U.S. consumer prices probably dropped 0.8 percent last month, the most since 1949, according to the median estimate in a Bloomberg survey before a report due Nov. 19. Builders broke ground on the fewest houses in at least a half century and factory output weakened further, other reports this week may show.

The Australian and New Zealand currencies dropped on Nov. 14 in New York as a Commerce Department report showed that sales at U.S. retailers fell 2.8 percent in October, the biggest drop since records began in 1992.

Shorting Australia's Dollar

Futures traders increased bets 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 8,604 on Nov. 11, compared with net shorts of 5,513 a week earlier.

The South Pacific nations' currencies dropped over the past three months as their central banks cut interest rates three times to boost domestic demand, reducing the appeal of the currencies for international investors seeking higher returns.

Benchmark interest rates are 5.25 percent in Australia and 6.5 percent in New Zealand, compared with 0.3 percent in Japan and 1 percent in the U.S.

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

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Turkish Central Bank Likely to Keep Rates Unchanged: Week Ahead

By Steve Bryant

Nov. 17 (Bloomberg) -- Turkey's central bank will probably leave the benchmark interest rate unchanged at more than five times the rate in the euro zone this week to defend the lira from the impact of the global economic crisis.

The bank will keep the overnight borrowing rate at 16.75 percent, where the Ankara-based lender has held it since July, according to all 16 economists surveyed by Bloomberg. The bank will announce its decision at 7 p.m. on Wednesday, Nov. 19.

Turkey is holding the cost of borrowing high, even as developing economies reduce their rates, to preserve the value of the lira and protect companies that have foreign currency debts. The lira has fallen 21 percent against the dollar since the start of October. The global uncertainty means Turkish monetary policy must remain ``cautious,'' the bank said on Oct. 31.

``The bank's major concern has to be the lira,'' said Yarkin Cebeci, economist for JPMorgan Chase & Co. in Istanbul. ``They know that any easing would be perceived as premature and have a negative impact on the lira.''

Turkish companies had foreign currency debts that exceeded their assets by $81.4 billion liras at the end of June, according to the latest data from the central bank. A decline in the local currency would fuel inflation by driving up import costs and would raises doubts over firms' ability to finance their borrowing.

Turkey's credit rating outlook was cut to negative from stable by Standard & Poor's on Nov. 13 on concern the country's banks will struggle to meet their financing needs next year because of the global credit crisis.

Rating Cut

Turkey's government and the International Monetary Fund are close to signing a new economic accord, Prime Minister Recep Tayyip Erdogan said Nov. 15. ``We are at a point very close to a solution,'' Erdogan told reporters after a press conference in Washington, where he attended a summit of leaders from the world's largest economies to discuss the global financial crisis.

Dominique Strauss-Kahn, the IMF's managing director, said at a press conference he is confident of reaching agreement on a new accord soon.

Inflation accelerated to 12 percent in October from 11.1 percent a month earlier. The bank is aiming to slow consumer- price growth to 7.5 percent by the end of next year.

The statistics office will announce unemployment data for the three months through September today at 10:00 a.m. in Ankara. The jobless rate in the three months to August was 9.4 percent, the highest summer jobless rate since the measure began in 2005.

Consumer Confidence

The office will also release November consumer confidence figures today. The CNBC-E channel's measure of confidence fell to its lowest since 2002 in October, the channel said on Nov. 3.

The benchmark ISE National 100 Index fell 4.6 percent last week as the global credit crunch brought fears of a recession and cut appetite for investments in emerging markets such as Turkey. The lira weakened almost 4 percent to 1.6063 per dollar as of late Nov. 14. The yield on the benchmark lira bond tracked by ABN Amro rose 56 basis points to 22.16 in the week.

Koc Holding AS, Turkey's biggest company, is due to report third-quarter earnings this week. It hasn't specified a date yet.

The following is a list of important events in Turkey next week:

Event                                                  Date
Unemployment rate                                      Nov. 17
Consumer confidence                                    Nov. 17
Base rate decision                                     Nov. 19
Koc Holding earnings                                   TBA

To contact the reporter on this story: Steve Bryant in Ankara at sbryant5@bloomberg.net.

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Yen Advances as G-20 Lacks Specifics to Boost Global Economy

By Stanley White

Nov. 17 (Bloomberg) -- The yen rose against the euro for a second day after the Group of 20 nations delayed agreeing specific measures to combat a global financial crisis, prompting investors to sell higher-yielding assets funded in Japan.

The yen also gained against the dollar before reports this week that economists estimate will show U.S. manufacturing and homebuilding sank deeper into recession. The greenback strengthened against the euro for a second day on speculation investors will avoid the risk of so-called carry trades.

``Disappointment over the G-20 meeting will spur yen gains,'' said Tsutomu Soma, a Tokyo-based bond and currency dealer at Okasan Securities Co. ``The global economy will be in trouble for a long time, so investors won't be willing to take on risk.''

The yen strengthened to 121.18 per euro as of 10:22 a.m. in Tokyo from 122.39 late in New York on Nov. 14. Japan's currency rose to 96.61 per dollar from 97.14 and Soma forecast it may reach 90.93 this week. Against the dollar, the euro fell to $1.2541 from $1.2605.

Japan's yen advanced against 15 of the 16 most-active currencies, rising the most versus the Australian dollar. It climbed 1.6 percent to 61.97 per Australian dollar and 0.9 percent to 53.22 per New Zealand dollar.

The G-20 urged a ``broader policy response'' and set a March deadline for recommendations on improving regulations at a summit that ended in Washington on Nov. 15. Leaders of G-20 countries met as a seizure in credit markets, stemming from losses of $964 billion on securities tied to home loans, pushed the U.S., Europe and Japan into recession.

Risk Aversion

The Nikkei 225 Stock Average dropped 0.6 percent after Japan's government today reported that gross domestic product fell at an annualized 0.4 percent pace in the three months ended Sept. 30, after sliding at a 3.7 percent rate in the previous quarter. Economists predicted 0.1 percent growth, a Bloomberg survey showed.

`The implications of the data are positive for the yen,'' said Toru Umemoto, chief currency analyst in Tokyo at Barclays Capital, Britain's third-biggest lender. ``A weak economy will feed into risk aversion and this will strengthen the yen.''

Japan's currency may rise to 92 per dollar by year-end, he said. Volatility implied on one-month dollar-yen options climbed to 28.50 percent from 26.63 percent late in New York on Nov. 14, indicating greater exchange-rate fluctuation risks that may erode profit on carry trades.

U.S. Economy

A gauge of manufacturing in New York sank to minus 26.0 in November, the lowest since the index started in 2001, according to a Bloomberg News survey of economists. The Federal Reserve Bank of New York will release the report today. Housing starts dropped to a 780,000 annual rate in October, the fewest since at least 1959, a separate Bloomberg survey shows. The Commerce Department will release the data on Nov. 19.

In carry trades, investors purchase higher-yielding assets funded with currencies borrowed at lower rates. The yen rose 2 percent against the euro last week and advanced by 5.1 percent against the Australian dollar and 8.1 percent versus the New Zealand dollar.

Benchmark interest rates are 0.3 percent in Japan, 1 percent in the U.S., 3.25 percent in Europe, 5.25 percent in Australia and 6.5 percent in New Zealand.

To contact the reporter on this story: Ron Harui in Singapore at rharui@bloomberg.net; Stanley White in Tokyo at swhite28@bloomberg.net.

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Asia Commodities Day Ahead: Lundin Seeks Buyer for Zinc Mine

Nov. 17 (Bloomberg) -- Lundin Mining Co. is seeking buyers for its Aljustrel mine in Portugal, the chief executive officer said today. Gold, silver, copper and platinum increased. Rusoro Mining Ltd. said it is the Venezuelan government's ``preferred partner'' to develop the country's largest gold deposit. Wheat, soybeans and corn climbed. Dow Chemical Co. said it will take ``radical actions'' to reach earnings targets next year amid a spreading recession.

INDUSTRIAL METALS, MINING

Lundin Mining Seeks Buyer for Aljustrel Zinc Mine

Lundin Mining Co., the Canadian zinc miner that has dropped more than 80 percent this year, is seeking buyers for its Aljustrel mine in Portugal, Chief Executive Officer Phil Wright said today.

Copper Jumps in Tandem With Rally in Asian, European Equities

Copper rose the most in a week as a rally in Asian and European equity markets eased concerns that a worldwide economic slump will slash metal demand. Copper climbed 8.5 cents, or 5.2 percent, to $1.715 a pound in New York.

PRECIOUS METALS, GEMS

Rusoro Says It Is `Preferred Partner' for Venezuelan Mine

Rusoro Mining Ltd. said it is the Venezuelan government's ``preferred partner'' to develop the country's largest gold deposit, which was to be dug by rival Crystallex Resources Ltd. until earlier this month.

Gold, Silver Rally on Inflation Expectations; Platinum Advances

Gold rose the most in eight weeks on speculation that central banks will add more liquidity to unfreeze credit markets, spurring inflation and boosting the appeal of the precious metal. Gold gained $37.50, or 5.3 percent, to $742.50 an ounce in New York. Silver jumped 69 cents, or 7.8 percent, to $9.49 an ounce. Platinum rose $32.10, or 3.9 percent, to $845.10 an ounce. Palladium increased $2.70, or 1.3 percent, to $216.65 an ounce.

AGRICULTURAL COMMODITIES

Corn, Soybeans Rise as Low Prices Slow U.S. Farmer Sales

Corn and soybeans rose on speculation that U.S. farmers, the world's biggest growers and exporters, are withholding newly harvested supplies after prices tumbled to one-year lows. Corn gained 3.25 cents, or 0.9 percent, to $3.8025 a bushel in Chicago. Soybeans climbed 2 cents, or 0.2 percent, to $8.96 a bushel.

Wheat Rises as Dry, Warm Weather May Curb Yields in Argentina

Wheat prices climbed for the fourth straight day as dry, warm weather eroded the prospects for crops in Argentina, expected to be the sixth-biggest exporter of the grain. Wheat rose 15.75 cents, or 2.8 percent, to $5.745 a bushel in Chicago.

Hogs Fall as Consumers May Pick Chicken Over Pork; Cattle Drop

Hog prices fell the most in two weeks on speculation that U.S. consumers may shift to chicken from pork after the poultry price tumbled. Hogs declined 0.625 cent, or 1 percent, to 62.575 cents a pound in Chicago. Cattle dropped 1.05 cents, or 1.1 percent, to 90.675 cents a pound. Feeder cattle tumbled 1.1 cent, or 1.1 percent, to 95.275 cents a pound.

CHEMICALS

Dow Chemical to Take `Radical Actions' to Reach Profit Goal

Dow Chemical Co., the largest U.S. chemical maker, will take ``radical actions'' to reach earnings targets next year amid a spreading global recession, Chief Executive Officer Andrew Liveris said.

SOFT COMMODITIES

Coffee Futures Rise as Low Prices Curb Sales; Cocoa Advances

Coffee futures rose on speculation that producers will withhold sales at prices 10 percent lower than a year ago, and as colder North American weather lifts demand for the hot beverage. Arabica coffee gained 0.5 cent, or 0.4 percent, to $1.1545 a pound in New York. In London, robusta coffee climbed $23, or 1.3 percent, to $1,828 a metric ton. Cocoa advanced $18, or 0.9 percent, to $1,966 a ton in New York.

Cotton Futures Rise as Dollar Drops, Low Prices Attract Buyers

Cotton climbed, posting its first weekly gain in almost a month, as the dollar fell and traders speculated that the lowest prices in six years will attract some buyers. Cotton gained 0.65 cent, or 1.6 percent, to 42.51 cents a pound in New York.

Sugar Rises in N.Y. on Speculation Holiday Demand Sparks Buying

Sugar prices rose for the first time this week amid speculation holiday demand is sparking purchases of cheap supplies. Raw sugar gained 0.23 cent, or 2 percent, to 11.65 cents a pound in New York. In another commodity market, orange juice fell 0.75 cent, or 0.9 percent, to 82.95 cents a pound.

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Queensland Storms Cut Power to Over 230,000 Homes, Businesses

By Angela Macdonald-Smith

Nov. 17 (Bloomberg) -- More than 230,000 homes and businesses in the southeast of Australia's Queensland state lost power after high winds, lightning strikes and driving rain cut supplies, said Energex, the region's power distributor.

The storms were the most damaging in about a quarter of a century, state-owned Energex said today in a statement on its Web site. By 4:30 a.m., power had been restored to more than 125,000 customers, while crews are working to reconnect the rest, it said.

The northwestern suburbs of the state capital of Brisbane were worst affected by yesterday's storms. Falling trees and branches ripped more than 33 kilometers (21 miles) of power lines from poles and roofing iron torn from homes was thrown into the 33,000 volt network.

``Due to the severity of the damage and debris blocking access to parts of the network some areas may be without supply until this afternoon,'' Energex said.

Power cuts occurred from the Gold Coast south of Brisbane to Gympie about 160 kilometers (104 miles) to the north, and to Ipswich in the west, Energex said.

The storms that ripped through the Brisbane area have since cleared, Weatherzone, a weather news service owned by The Weather Co., reported on its Web site. Severe thunderstorm warnings were canceled early this morning and showers and lighter rain are forecast today, it said.

To contact the reporter on this story: Angela Macdonald-Smith in Sydney at amacdonaldsm@bloomberg.net

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Corn, Soybeans May Rise as Farmers Limit Sales on Low Prices

By Jeff Wilson

Nov. 17 (Bloomberg) -- Corn and soybeans may rise this week on speculation that U.S. farmers will limit sales of newly harvested crops because of low prices. Cold, wet weather in the Midwest may also damage crops, reducing supplies.

Eighteen of 28 traders and advisers surveyed Nov. 14 from Tokyo to Chicago said corn will rise, and 19 of 29 respondents forecast a gain in soybeans. Corn rose 1.3 percent to $3.8025 a bushel last week in Chicago. Soybeans dropped 2.7 percent to $8.96 a bushel. Corn and soybeans are down 52 percent and 45 percent, respectively, from records earlier this year.

Last week's gains in corn were expected by the majority of respondents surveyed on Nov. 7, while the drop in soybeans was a surprise. Since 2004, 55 percent of the surveys were correct for corn and 58 percent for soybeans.

Weekly results: Bullish on corn: 18 Bullish on soybeans: 19 Bearish on corn: 10 Bearish on soybeans: 10

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

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Gold May Gain for Third Straight Week as Dollar Rally Stalls

By Pham-Duy Nguyen

Nov. 17 (Bloomberg) -- Gold may gain for the third straight week on speculation the dollar's rally will stall, boosting the appeal of the precious metal as an alternative investment.

Eleven of 23 traders, investors and analysts surveyed from Mumbai to Chicago on Nov. 13 and Nov. 14 advised buying gold, which rose 1.1 percent last week to $742.50 an ounce in New York. Six said to sell, and six 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 Nov. 6 and Nov. 7 anticipated gold's gains last week. The survey has forecast prices accurately in 141 of 237 weeks, or 59 percent of the time.

Last week's survey results: Bullish: 11 Bearish: 6 Neutral: 6

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

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Oil Falls as Japan Recession Signals Slow Demand, Supply Gains

By Gavin Evans

Nov. 17 (Bloomberg) -- Crude oil fell for a second day in New York as figures showed Japan's economy entered a recession for the first time since 2001, a further signal of weakening global energy demand and increasing stockpiles.

Gross domestic product fell an annualized 0.1 percent in the three months ended Sept. 30 after shrinking 3.7 percent in the previous period, Japan's Cabinet Office said today in Tokyo. A report today in the U.S., the world's largest oil user, may show industrial production rose from a three-year low last month as increased oil output along the Gulf of Mexico coast offset a decline in manufacturing.

``There doesn't seem to be much out there to stop the fall in prices,'' said Toby Hassall, research analyst at Commodity Warrants Pty in Sydney. ``Weak demand and a pretty bleak demand outlook'' could push oil prices as low as $50 this week, he said.

Crude oil for December delivery dropped as much as $1.44, or 2.5 percent, to $55.60 a barrel in after-hours electronic trading on the New York Mercantile Exchange. It was at $55.73 at 8:20 a.m. in Singapore.

The contract slumped 2.1 percent to settle at $57.04 on Nov. 14, having touched $54.67 the previous day, the lowest since Jan. 30, 2007. Prices declined 6.6 percent last week as world equity markets dropped, Germany entered its worst recession in 12 years and U.S. retail sales fell for a fourth straight month.

Economists had predicted the economy in Japan, the world's third-largest oil consumer, would rebound 0.1 percent in the September quarter.

IEA Cuts Forecast

The International Energy Agency last week slashed its global oil consumption forecast for 2009 by 670,000 barrels a day. Demand will rise 0.4 percent to 86.5 million barrels a day, with growth in emerging nations offsetting a 1.6 percent contraction in fuel use in developed economies, the Paris-based agency said.

Brent crude oil for January settlement fell 76 cents, or 1.4 percent, to $53.48 a barrel on London's ICE Futures Europe exchange. The contract fell 3.6 percent to $54.24 a barrel on Nov. 14.

OPEC is likely to wait until December before cutting output again, the group's president, Chakib Khelil, said in Algeria yesterday.

Saudi Arabia, the world's biggest oil producer and the largest member in OPEC, will help alleviate global financial stress by maintaining stable oil markets, King Abdullah said after a meeting of Group of 20 leaders in Washington Nov. 15.

`Compliance Issue'

Iran, OPEC's second-largest producer, may seek a production cut of as much as 1.5 million barrels a day when the group meets in Cairo later this month, the Associated Press reported Nov. 15, citing televised comments by the nation's OPEC Governor Mohammad Ali Khatibi.

The group, which pumps about 40 percent of the world's oil, cut output by 1.5 million barrels a day last month. It will have more information on which to make a decision on further cuts at the Dec. 17 meeting in Oran, Algeria, Khelil said yesterday.

``We have yet to see the full cut from the previous meeting implemented at this stage,'' Commodity Warrants' Hassall said. ``Compliance is always going to be an issue.''

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

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Asian Stocks Decline as Japan, Hong Kong Slide into Recession

By Kyung Bok Cho and Masaki Kondo

Nov. 17 (Bloomberg) -- Asian stocks fell after Japan and Hong Kong slid into recession and the Group of 20 nations delayed agreeing on specific measures to combat the global crisis.

Mitsubishi UFJ Financial Group Inc., Japan's biggest bank, lost 3.9 percent after the nation's economy contracted 0.4 percent in the third quarter. Posco, which gets 70 percent of its sales from within South Korea, declined 5.5 percent after Yonhap News reported the International Monetary Fund may cut its forecast for the country's 2009 growth. James Hardie Industries NV, the biggest seller of home siding in the U.S., retreated 11 percent in Sydney after profit declined 26 percent amid the worst housing slowdown since the Great Depression.

The MSCI Asia Pacific Index sank 1.9 percent to 81.56 at 9:22 a.m. in Tokyo, its lowest in 2 1/2 weeks.

Japan's Nikkei 225 Stock Average slipped 2.6 percent to 8,242.05. Australia's S&P/ASX 200 Index fell 3.2 percent after Babcock & Brown Ltd., which has plunged 98 percent this year, said it may lose $41 million on a venture with GPT Group. BHP Billiton Ltd., the world's biggest mining company and Australia's biggest oil producer, lost 5 percent as crude oil for December delivery dropped as much as 2.5 percent to $55.60 a barrel.

Shares on the MSCI index are valued at 10 times trailing earnings and fell to as low as 8.2 times last month. Prior to the current market turmoil, it never dropped below 10, according to Bloomberg data dating back to 1995. The gauge has lost more than half its value since the peak in November 2007.

Futures on the Standard & Poor's 500 Index slid 0.1 percent. The S&P 500 fell 4.2 percent on Nov. 14, led by Sears Holdings Corp. and Home Depot Inc., after sales at retailers declined 2.8 percent last month, the most since records began in 1992.

G20 Meeting

A slump in demand is spreading from North America to emerging markets, prompting Toyota Motor Corp. to cut its global sales forecast for 2009 to less than 9 million vehicles from 9.7 million, the Tokyo Shimbun reported yesterday. The company will announce the revised forecast next month, the newspaper said.

Japan's economy, the world's second largest, slipped into recession for the first time since 2001 as companies cut back spending, the Cabinet Office said today. Hong Kong's economy shrank 0.5 percent in the third quarter from the previous three months as exports declined, the government said on Nov. 14.

Australian retail sales, adjusted to remove the effect of inflation, increased 0.1 percent from the June quarter when they fell 0.2 percent, the Bureau of Statistics said in Sydney today. The median forecast of 15 economists surveyed by Bloomberg New was for a 0.4 percent gain.

On Nov. 15, leaders from the biggest developed and emerging nations urged a ``broader policy response,'' citing the potential for additional interest-rate cuts and fiscal stimulus, after meeting in Washington. The G20 set a March deadline for recommendations on strengthening accounting standards, derivatives markets and oversight of hedge funds and debt-rating companies.

To contact the reporter for this story: Kyung Bok Cho in Seoul at kcho7@bloomberg.net; Masaki Kondo in Tokyo at mkondo3@bloomberg.net.

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Indonesian Economy Probably Expanded at Slowest Pace in 2 Years

By Arijit Ghosh and Michael Munoz

Nov. 17 (Bloomberg) -- Indonesia's economy probably grew at the slowest pace in two years in the third quarter as declining commodity prices reduced the value of exports.

Southeast Asia's largest economy expanded 5.9 percent from a year earlier, after growing 6.4 percent in the preceding three months, according to the median estimate of 22 economists in a Bloomberg News survey. The Central Statistics Bureau will release the data in Jakarta today.

Exporters in Indonesia, the world's biggest producer of palm oil and the second-largest maker of rubber, are reeling from a slump in commodity prices as a slowdown in the U.S. and Europe reduces demand. Frozen credit markets are also making it difficult for companies to obtain the letters of credit needed to secure payment for their shipments.

``A few months ago I had five out of six containers already on their way to the port returned because the client suddenly called and said he couldn't secure the payment,'' said Umar Chotob, owner of CV Java Marindra Jaya, which exports wooden furniture. ``The impact of the financial turmoil is remarkable. It's overwhelming.''

Indonesia's export growth slowed to 14 percent in the three months to Sept. 30, according to the economists' survey. That's the smallest increase in three quarters. Indonesia last month cut next year's target for overseas sales to below 11.9 percent.

`Much Lower'

``All export prices are down and you can't compensate that with extra volume because demand is not there,'' said Tony D. Costa, the president of PT Bank Rabobank International Indonesia, a unit of the world's biggest agricultural lender. Consumer spending is slowing and ``I can bet that motorcycle sales will be much lower. That means the economy will slow.''

Rising prices of coal, palm oil, coffee and rubber earlier this year increased the income of farmers and miners. That helped boost sales of motorcycles to a record 612,032 in August, after Indonesians purchased an unprecedented 60,830 cars in July.

Since then, commodity prices have tumbled.

``Falling commodity prices, which dampen rural incomes, tightening liquidity conditions from ballooning loan-deposit ratios and higher interest rates, and still high inflation rates could hurt private consumption spending in the near term,'' said Sim Moh Siong, an economist at Citigroup Inc. in Singapore.

Indonesia's economic growth may slow to as low as 5 percent next year as the world tilts toward a recession, Finance Minister Sri Mulyani Indrawati said on Nov. 9.

``It will be very, very challenging for us to maintain growth under the current circumstances,'' Sri Mulyani said. ``Just like other developing countries, we have to be prepared for a longer period of weakening in the economy.''

The International Monetary Fund this month predicted the first simultaneous recession in the U.S., Japan and euro region in the post-World War II era next year.

The following is a table of economists' forecasts.

--------------------------------------------------------------
                           3Q      3Q         Private Exports
Firm                       YoY     QoQ    2008    Cons
--------------------------------------------------------------
Median                   5.90%   3.38%   6.10%   5.10%  14.00%
Average                  5.80%   3.20%   6.05%   5.31%  14.45%
High                     6.24%   3.67%   6.28%   6.42%  18.50%
Low                      4.40%   1.90%   5.60%   4.80%   8.30%
Number of Estimates         22      15      16       9       9
--------------------------------------------------------------
Action Economics         6.00%   3.50%   6.00%   5.00%  18.50%
ATR-Kim Eng Capital      5.90%      --   6.00%      --      --
Bahana Securities        5.80%   3.29%   6.00%      --      --
Bank Central Asia        6.20%   3.60%   6.20%   5.80%   8.30%
Bank Danamon             6.00%   3.60%   6.20%   5.20%  18.50%
Bank Intl Indonesia      6.13%   3.61%   6.20%      --      --
CFC Seymour Limited      4.40%   1.90%   5.60%   4.90%  17.30%
CIMB Niaga Bank          6.12%   3.60%   6.15%   6.42%  13.18%
Citi                     5.80%      --      --      --      --
Credit Suisse            5.40%   2.90%   5.70%   4.80%  12.00%
Danareksa Securities     6.19%   3.67%   6.28%      --      --
Forecast Ltd.            6.12%      --      --      --      --
Ideaglobal               5.80%      --      --      --      --
ING Groep NV             5.30%   2.80%      --      --      --
Mandiri Securities       6.01%   3.50%   6.15%   5.10%  13.10%
Moody's Economy.com      5.10%      --   5.88%      --      --
OCBC Bank                6.00%      --   6.18%      --      --
PT. Mega Capital         5.89%   3.38%      --      --      --
Reuters IFR              5.80%   3.30%   6.10%      --      --
Samuel Sekuritas Indo    6.24%   2.10%   6.09%   5.50%  15.20%
Standard Chartered       5.80%   3.30%   6.00%   5.10%  14.00%
UBS                      5.50%      --      --      --      --
--------------------------------------------------------------

To contact the reporter on this story: Arijit Ghosh in Jakarta at aghosh@bloomberg.net

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Australia Stocks: Alumina, Babcock, BHP, Coca-Cola, Lend Lease

By Shani Raja

Nov. 17 (Bloomberg) -- The S&P/ASX 200 Index slipped 68.50 points, or 1.8 percent, to 3,679.60 at 10:30 a.m. in Sydney, the lowest since Oct. 2004. The broader All Ordinaries Index lost 64.30 points, or 1.7 percent, to 3,661.70, while the futures index expiring in December declined 0.9 percent to 3,724.

Alumina Ltd. (AWC AU), partner in the world's biggest producer of the material used to make aluminum, slumped 9 cents, or 7 percent, to A$1.27, the lowest since Sept. 1986. The company said it expects debt to remain near $697 million until the end of the year.

Babcock & Brown Wind Partners (BBW AU) rallied 2 cents, or 3.1 percent, to 82 cents, among the index's top-10 gainers. Babcock & Brown Ltd. (BNB AU) and its wind affiliate sold most of the assets of their Portuguese wind-energy unit Enersis to investors led by Magnum Capital, the buyout fund started by former chief executive officers of Banco Santander SA and EDP- Energias de Portugal SA.

BHP Billiton Ltd. (BHP AU), the world's largest mining company, slumped 99 cents, or 3.8 percent, to A$25.41, the most since Nov. 13. BHP plummeted 9.1 percent in New York trading and dropped in London after saying customers requested a deferral of iron ore shipments equal to 5 percent of its budget for 2008 as China's economy slows.

Coca-Cola Amatil Ltd. (CCL AU) soared A$1.36, or 17 percent, to A$9.61, the most since 1991 and the benchmark's best performer. Lion Nathan Ltd., Australia's second-largest brewer, offered to buy Coca-Cola Amatil for A$7.6 billion ($4.9 billion) in cash and stock to create a company selling everything from beer to soda, juice and wine.

James Hardie Industries NV (JHX AU), the biggest seller of home siding in the U.S., fell 15 cents, or 3.2 percent, to A$4.60, the most in three days. The company said second-quarter earnings dropped 26 percent and it won't pay a half-year dividend amid the worst housing recession since the Great Depression.

Lend Lease Corp. (LLC AU) dropped for the third day, losing 8 cents, or 1.2 percent, to A$6.57, the lowest since 1993. Greg Clarke, chief executive officer of Lend Lease, said Australia's largest developer is finding it ``tougher than usual'' to sell assets. Lend Lease last week scrapped plans to sell its half of the King of Prussia shopping center, the third-largest mall in the U.S.

To contact the reporter on this story: Shani Raja in Sydney at sraja4@bloomberg.net.

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Japan Stocks Drop on U.S. Retail Sales, G-20 Summit; Sony Falls

By Masaki Kondo

Nov. 17 (Bloomberg) -- Japan's stocks fell after U.S. retail sales dropped by a record, a leaders' summit delayed agreeing on specific measures to allay the global financial crisis, and the nation's economy sank into its first recession since 2001.

Sony Corp., which gets a quarter of its sales from the U.S., slumped 3.1 percent after U.S. spending slowed and the yen appreciated against the dollar. Toyota Motor Corp. declined 2.2 percent on a newspaper report the company will cut its sales target for the next year. Mitsui Fudosan Co., Japan's biggest developer, lost 7.3 percent after the Nikkei newspaper said rents for Tokyo offices dropped for the first time in six years.

The Nikkei 225 Stock Average retreated 63.46, or 0.8 percent, to 8,398.93 as of 10:26 a.m. in Tokyo. The broader Topix index fell 6.09, or 0.7 percent, to 840.82.

``U.S. retail sales, the outcome of the G-20 meeting and the yen's exchange rate point to a drop in today's stock market,'' Tomochika Kitaoka, a Tokyo-based strategist at Mizuho Securities Co., said in an interview with Bloomberg Television. ``The G-20 failed to meet investors' expectations.''

U.S. retail sales fell 2.8 percent last month, the biggest monthly slide since records began in 1992, the Commerce Department said on Nov. 14. Japan's gross domestic product dropped an annualized 0.4 percent in the third quarter, the Cabinet Office said before markets opened, confirming the economy entered a recession. Economists had estimated a 0.1 percent gain.

With consumer confidence in the U.S., Europe and Japan sinking to the lowest in at least 15 years, more than half of Japan's biggest companies have cut their full-year earnings targets, according to Shinko Research Institute Co.

Fiscal Stimulus

After a summit in Washington, leaders from the Group of 20 nations set a March deadline for recommendations on strengthening accounting standards, derivatives markets and oversight of hedge funds and debt-rating companies.

Sony, the world's second-biggest maker of consumer electronics, slid 3.1 percent to 2,010 yen, while Canon Inc., a digital camera maker that gets a third of its sales from the Americas, slumped 3.6 percent to 2,810 yen. Nissan Motor Co., Japan's third-largest automaker, dropped 4.3 percent to 356 yen.

Wider Slump

A slump in demand is spreading from North America to emerging markets, prompting Toyota to cut its global sales forecast for 2009 to less than 9 million vehicles from 9.7 million, the Tokyo Shimbun reported yesterday. Toyota's stock dropped 2.2 percent to 3,070 yen.

The yen appreciated against the dollar to as much as 95.88 today from 97.07 at the close of stock trading in Tokyo on Nov. 14, while strengthening against the euro to as much as 120.19 from 123.68. A 1 yen change against the dollar alters Canon's annual operating profit by 2.6 billion yen ($27 million), the company said on Oct. 27.

Mitsui Fudosan sank 7.3 percent to 1,353 yen, and Mitsubishi Estate Co., the nation's second-biggest real estate company, retreated 7.5 percent to 1,365 yen. Sumitomo Realty & Development Co., the No. 3, stumbled 7.8 percent to 1,210 yen. A gauge of real-estate companies posted the steepest drop among 33 industry groups on the Topix.

Building owners are lowering rents for new office buildings in Tokyo as an economic slowdown prevents tenants from expanding their operations or moving to new offices, the Nikkei said today, citing its own survey.

Nikkei futures expiring in December retreated 2.7 percent to 8,250 in Osaka and slumped 2.9 percent to 8,265 in Singapore.

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

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American Express, Charles Schwab, Honda: U.S. Equity Preview

By Lu Wang

Nov. 16 (Bloomberg) -- The following companies may have unusual price changes in U.S. trading tomorrow. Stock symbols are in parentheses, and share prices are as of 5:30 p.m. in New York on Nov. 14, unless otherwise specified.

Standard & Poor's 500 Index futures expiring in December lost 46.20, or 5.1 percent, to 861.50. Dow Jones Industrial Average futures fell 459, or 5.2 percent, to 8,371. Nasdaq-100 Index futures slipped 79, or 6.4 percent, to 1,155.50.

American Express Co. (AXP US): The credit-card company may rise to $30 a share during the next year as it remains ``solidly profitable'' and attracts investors such as Warren Buffett, Barron's reported, without citing anyone. American Express fell 79 cents to $19.99 on Nov. 14.

Charles Schwab Corp. (SCHW US): The discount brokerage may rise once the financial market stabilizes, as its steady revenue stream and lean cost structure make the stock more resilient than other brokerages, Barron's reported, without citing anyone. Schwab fell $1.28, or 7.2 percent, to $16.61 in trading on Nov. 14.

Colgate-Palmolive Co. (CL US): The consumer products company may rise to $79 as its brand power and lower commodity prices help it improve earnings, Barron's reported, citing Lauren DeSanto, an equity analyst at Morningstar Inc. Colgate shares fell $1.64, or 2.6 percent, to $62.06 in Nov. 14 trading.

ConocoPhillips (COP US) rose $1.37, or 2.9 percent, to $48.76 in trading after the official close of exchanges. Warren Buffett's Berkshire Hathaway Inc. (BRK/A US) increased its stake in the oil producer and held more than 83 million shares as of Sept. 30, according to a regulatory filing.

Gilead Sciences Inc. (GILD US) fell $1.82, or 3.9 percent, to $45.10. The leading maker of AIDS treatments said Teva Pharmaceutical Industries Ltd. (TEVA IT) has expressed its intention to make a generic version of Gilead's top-selling drug Truvada.

Honda Motor Co. (HMC US): The Japanese automaker may be undervalued after the stock declined 46 percent from a year earlier amid a slowing global economy and falling vehicle demand, Barron's reported, citing Steven Usher, an analyst at Japaninvest Co. Honda's American depositary receipts, each representing one ordinary share, fell 76 cents to $21.65 on Nov. 14.

Lincoln National Corp. (LNC US): The insurer and Genworth Financial Inc. (GNW US) plan to buy savings and loan companies, a move that may make them eligible for the Treasury's $700 billion bailout program, according to Office of Thrift Supervision spokesman Bill Ruberry. Lincoln lost 5.2 percent to $14.35 in regular trading while Genworth slipped 3.9 percent to $1.47.

Xcel Energy Inc. (XEL US): The biggest U.S. supplier of wind- generated power to retail customers proposed a $174.7 million electricity rate increase for Colorado. The stock fell 1.6 percent to $17.98 in regular trading.

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

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Doha Bank of Qatar to Sell Shares to QIA for $404 Million

By Shaji Mathew

Nov. 16 (Bloomberg) -- Doha Bank QSC plans to raise 1.47 billion riyals ($404 million) by selling new shares to the Qatar Investment Authority as the country's third-biggest bank by assets seeks to raise its capital by 20 percent.

Doha Bank will offer 34.4 million shares to the Gulf emirate's $60 billion sovereign wealth fund at the closing price on Oct. 12 of 42.8 riyals, the bank said today in a statement on the Doha bourse Web site.

The Qatar Investment Authority, or QIA, said last month it would contribute between 10 percent and 20 percent of Qatari banks' capital to guarantee financing for development projects in the country, seeking to protect Qatar from the global credit crisis.

Doha Bank will issue shares to QIA in two phases and will call a shareholders' meeting on Dec. 24 to approve the plan, according to the statement.

To contact the reporter on this story: Shaji Mathew in Dubai at shajimathew@bloomberg.net

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