Australia’s Business Confidence Holds at a Record Low

By Jacob Greber

Dec. 9 (Bloomberg) -- Australian business confidence held at a record low in November, reinforcing speculation the economy may slide into its first recession since 1991.

The sentiment index fell 1 point to minus 30 from October, the lowest level since the series began in 1989, according to a National Australia Bank Ltd. survey of more than 560 companies conducted between Nov. 23 and Nov. 30.

Business sentiment is being buffeted by this year’s 43 percent slump in the S&P/ASX 200 stock index, turmoil on global credit markets and signs that consumers have slashed spending. Central bank Governor Glenn Stevens cut borrowing costs last week to a six-year low of 4.25 percent, extending the biggest round of interest rate reductions in almost two decades.

“The results of the November survey make grim reading,” said Alan Oster, chief economist at National Australia in Melbourne. “The financial crisis is now having real effects on the Australian economy, with significant revisions down on business views about future employment and investment.”

The business conditions gauge, a measure of hiring sales and profits, tumbled 6 points in November to minus 17, the lowest level since 1997, according to today’s report.

“What is particularly concerning is the speed of the deterioration in recent times,” Oster said. “Nor does it appear that the deterioration has bottomed.”

The Australian dollar fell to 66.10 U.S. cents at 11:37 a.m. in Sydney from 66.19 cents before the statement was released. The two-year government bond yield was unchanged at 3.11 percent.

Stimulus Package

Concern that the economy is faltering prompted the government to give A$10.4 billion ($6.9 billion) in grants to pensioners, families and first-home buyers. Most of the payments were made this week.

If the economy is to avoid a contraction, “much clearly depends on consumers spending the government’s fiscal package,” Oster said.

The economy grew 0.1 percent in the third quarter from the previous three months, the weakest pace in eight years.

Retailers such as Harvey Norman Holdings Ltd. are reporting falling profits amid the slump in consumer spending, which accounts for around 60 percent of gross domestic product.

Australia’s biggest furniture and electronics retailer said last month that earnings in the quarter through September fell 32 percent and that profit margins remain “under pressure.”

‘Significant Deterioration’

One of the more concerning findings in the survey is the “significant deterioration in orders,” Oster said. A gauge of orders slumped 5 points in November to minus 25, the lowest since late 1991, when the economy was last in a recession.

About 27 percent of companies reported tougher credit availability, according to today’s survey.

“A combination of falling sales, profits and confidence has significantly affected employers hiring and firing behaviors,” Oster said.

The jobless rate rose to 4.4 percent in November from 4.3 percent in October, a Dec. 11 report may show, according to the median of 22 economists surveyed by Bloomberg.

Governor Stevens said last week that the Reserve Bank of Australia’s monetary policy is now “expansionary” to help restore consumer and business confidence.

Stevens and his board have reduced the benchmark rate since early September by 3 percentage points, and are forecast to cut the rate by another half-point when they next meet on Feb. 3, according to 16 of 21 economists surveyed by Bloomberg News.

Oster said National Australia expects interest rates will be reduced to 3 percent early next year.

The sentiment index posted an 11th straight reading of less than zero in November, which indicates companies expecting their industry will deteriorate outnumber those seeing an improvement.

“The falls in business confidence are extremely broad based,” led by declines in wholesaling, manufacturing, construction and retailing, Oster said.

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

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U.K. November Housing Sales Fall to 30-Year Low, RICS Says

By Brian Swint

Dec. 9 (Bloomberg) -- U.K. home sales declined to the lowest level since at least 1978 as Britain plunged deeper into a recession, the Royal Institution of Chartered Surveyors said.

Real-estate agents and surveyors sold an average of 10.6 homes in the quarter through November, the least since the series began three decades ago, RICS said today. A separate report showed retail sales fell in two consecutive months for the first time since at least 1995.

The Bank of England last week reduced the benchmark interest rate to 2 percent, the lowest in a half-century, as policy makers sought to prevent deflation from taking hold in the economy. With homebuyers shunning the housing market and a squeeze on bank lending, central bank Governor Mervyn King has refused to rule out cutting the rate to zero.

“The problem is partly mortgage finance, but the other thing is the state of the economy,” Simon Rubinsohn, chief economist at RICS, said in an interview on Bloomberg Television. “Prices are continuing to fall fairly sharply.”

The percentage of real-estate agents saying prices dropped exceeded those reporting gains by 76 percentage points, an indicator that has been negative since August 2007, RICS said. The index still rose for a third month to the highest level since February.

Retail Sales

Prime Minister Gordon Brown this month reduced sales tax to bolster consumer spending as the housing slump deepened. U.K. retail sales at stores open at least 12 months dropped 2.6 percent in November from a year earlier, the British Retail Consortium said today. That’s the first back-to-back annual decline since the survey started 13 years ago.

“These are clearly tough times,” Stephen Robertson, director general at the BRC, said in a statement. “All sectors are down apart from food and drink.”

Britain’s inflation rate fell the most in at least 11 years in October to 4.5 percent after oil prices dropped and the economy contracted 0.5 percent in the third quarter. Producer prices declined for a fourth month in November, the statistics office said yesterday.

U.K. mortgage approvals matched the lowest since at least 1999 in October as the financial crisis prompted banks to hoard money and curb loans, the Bank of England reported Dec. 1. The central bank predicted last month that the economy will contract through most of next year.

“Unless people feel relatively confident about their job prospects, they’re unlikely to even try to obtain mortgage finance,” said Jeremy Leaf, a spokesman for RICS and a real- estate agent. “Vendors still have to accept the inevitable fact that house prices are falling and re-price their property to suit current market conditions.”

To contact the reporter on this story: Brian Swint in London at bswint@bloomberg.net.

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China’s Industrial Output May Grow at Weakest Pace Since 1999

By Kevin Hamlin

Dec. 9 (Bloomberg) -- China’s industrial production probably grew at the weakest pace in nine years as exports slowed and the economy cooled, raising the likelihood of more interest-rate cuts and extra government spending.

Output rose 7.2 percent in November from a year earlier, according to the median estimate of 14 economists surveyed by Bloomberg News, down from 8.2 percent in October.

China needs to prepare for a “worst case scenario” as a global economic slump deepens, Central bank Governor Zhou Xiaochuan said Dec. 4. Exporters of toys, clothes and furniture are cutting production or closing down, triggering a surge in labor disputes and increasing the risk of social unrest in the world’s most populous nation.

“There will be more rate cuts and more fiscal easing,” said Ben Simpfendorfer, an economist with Royal Bank of Scotland Plc in Hong Kong.

Industrial-production growth would be the least since October 1999, excluding distortions caused in January and February each year by Lunar New Year holidays. The number is due Dec. 15.

Simpfendorfer predicts two rate reductions before year’s end and is poised to cut his forecast for China’s economic growth in 2009 to 5 percent from an 8 percent estimate, depending on data this week and next. That would be the least since 1990.

China’s leaders are holding an annual economic policy meeting in Beijing this week and may consider a package of measures to boost consumption, including cutting personal income tax, according to Kevin Lai, senior economist at Daiwa Institute of Research in Hong Kong.

Export, Import Slowdown

Exports climbed 14.8 percent from a year earlier, the slowest pace since March last year, according to the median estimate of 18 economists surveyed by Bloomberg News. Trade numbers may be released as early as today.

Imports increased 12 percent, the least in six years, as commodity prices fell and weakness in manufacturing and construction cut demand for raw materials, the survey showed.

The trade surplus may have been $32 billion, the second biggest on record. October’s trade gap was $35.2 billion.

A Chinese newspaper had a gloomier forecast for exports. Shipments may have fallen last month for the first time since June 2001, the 21st Century Business Herald said Dec. 7, citing an unidentified person. The lowest estimate in the Bloomberg survey was for a 10 percent gain.

Demand is waning because of recessions in Europe, Japan and the U.S., where retail sales fell last month by the most since data began in 1969.

Labor Disputes, Social Instability

In China, labor disputes almost doubled in the first 10 months of this year as businesses closed and some owners fled, the official China Daily newspaper reported Dec. 5.

Sacked workers rioted at a toy factory in Guangdong province last month and Zhang Ping, the nation’s top planner, warned of the risk of “massive unemployment” and “social instability.”

On Nov. 9, the State Council announced a 4 trillion yuan ($581 billion) stimulus package, mostly for public works. The central bank has also cut the key one-year lending rate to 5.58 percent from 7.47 percent in September and dropped quotas limiting lending by banks.

The “aggressive” monetary response is likely to continue, said Grace Ng, an economist with JPMorgan Chase & Co. in Hong Kong, who expects the rate to fall to 3.96 percent next year.

Falling Yuan

The yuan’s biggest one-day decline in three years on Dec. 1. also has prompted speculation that China may allow its currency to depreciate, helping exporters by making their products cheaper in overseas markets.

The yuan may weaken as much as 10 percent against the dollar, Morgan Stanley said last week. In contrast, Commerce Minister Chen Deming said that the nation won’t rely on currency depreciation to help exporters who are suffering because of shrinking demand.

Inflation may have cooled in November for the seventh straight month. Consumer prices rose 3.3 percent, according to another Bloomberg News survey. That figure is due on Dec. 11.

To contact the reporters on this story: Kevin Hamlin in Beijing at khamlin@bloomberg.net

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Japan’s Economy Shrinks 1.8%, More Than Expected

By Jason Clenfield

Dec. 9 (Bloomberg) -- Japan’s economy shrank in the third quarter faster than the government initially estimated, after businesses cut spending and slashed inventories in anticipation of a prolonged recession.

Gross domestic product contracted at an annual 1.8 percent pace in the three months ended Sept. 30, the Cabinet Office said today in Tokyo, more than the 0.4 percent reported last month. Economists surveyed by Bloomberg predicted a 0.9 percent decline.

Japan’s first recession since 2001 is deepening as companies including Canon Inc. and Toyota Motor Corp. cut production, jobs and spending. The central bank’s Tankan survey next week will probably show sentiment among large manufacturers fell the most in 34 years, economists predict.

“Big Japanese companies are panicking about the global export market,” said Graham Davis, director of the Economist Intelligence Unit in Tokyo. “There’s almost no good news out there.”

The yen traded at 92.85 per dollar at 10:04 a.m. in Tokyo from 93.04 before the report. Japan’s currency has surged 14 percent against the dollar since September, adding to exporters’ woes by eroding the value of their profits made abroad.

The Nikkei 225 Stock Average climbed 1.5 percent after U.S. President-elect Barack Obama’s plan to boost infrastructure investment spurred a rally in commodities. The yield on the 10- year government bond rose one basis point to 1.4 percent.

Tankan Survey

The Tankan index of confidence among big manufacturers will plunge to minus 23 points in December from minus 3 points three months earlier, according to the median estimate of 22 economists surveyed by Bloomberg News. The Bank of Japan will release the quarterly survey on Dec. 15.

From the second quarter, the economy shrank 0.5 percent, more than the 0.1 percent initially reported. Economists expected a 0.2 percent contraction.

Business spending slid 2 percent from the second quarter, more than the 1.7 percent drop reported last month. The revision reflected Finance Ministry figures last week that showed capital spending fell for a sixth quarter.

Canon, which is predicting its first full-year profit drop since 2000, said last month it will delay construction of a 100 billion yen ($1.1 billion) printer-cartridge factory in Oita Prefecture, southwestern Japan, as global demand slows. Toyota may lower its operating profit forecast because of weaker sales and the stronger yen, the Yomiuri newspaper reported today, without citing anyone.

Unpopular Aso

On a nominal basis, which excludes adjustments for inflation, the economy shrank 0.7 percent from the previous quarter. The GDP deflator, a broad measure of price changes, fell 1.6 percent.

The recession has taken a toll on Prime Minister Taro Aso, whose approval rating has dropped to below that of his predecessor Yasuo Fukuda when he was forced to step down three months ago. The ruling coalition, which faces elections by September, may propose spending an extra 20 trillion yen ($215 billion) during the next three years to spur the economy, the Yomiuri said today.

Inventories accounted for 0.2 percentage point of the contraction, the biggest drag on the revised figures, as companies reduced stockpiles to avoid a glut should demand continue to fall, said Seiji Adachi, a senior economist at Deutsche Securities Inc. in Tokyo. Companies last month said they planned to cut production at the fastest pace in 35 years.

“Industrial production will show a very serious decline in coming months,” said Hiroaki Muto, a senior economist at Sumitomo Mitsui Asset Management Co. in Tokyo, who predicts the slowdown to continue until late 2009. “The pace of the downturn is accelerating worldwide.”

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

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Hong Kong’s Luxury Homes Sales Plunge in November on Recession

By Kelvin Wong

Dec. 9 (Bloomberg) -- Hong Kong’s luxury home sales fell in both quantity and value in November from a month earlier, as the slowing economy hurt the purchasing power of the wealthy.

Transactions of apartments and houses valued at more than HK$10 million ($1.3 million) fell 34 percent to 92 last month, with the deal value tumbling 62 percent to HK$2.08 billion, according to figures compiled by realtor Centaline Property Agency Ltd. Both numbers are the lowest since September 2003, the agency said in a press release yesterday.

Homebuyers and banks may be concerned both about Hong Kong’s economy, which contracted 0.5 percent in the third quarter to put the city in its first recession since 2003, and the jobless rate, which rose to 3.5 percent in October. The benchmark Hang Seng Index has declined 46 percent this year. Banks have raised mortgage rates, making financing home purchases more expensive.

“Both end-users and investors are very cautious,” said Wong Leung-sing, an associate research director at Centaline. “But with strong sales figures from some new projects lately we may see the number of transactions picking up over the next few weeks.”

Sun Hung Kai Properties Ltd., Hong Kong’s biggest builder by market value, sold more than 400 units at its luxury Peak One residential project in the Sha Tin suburban district north of the city center in the 10 days after sales started, the Hong Kong Economic Times reported yesterday.

To contact the reporter on this story: Kelvin Wong in Hong Kong at kwong40@bloomberg.net

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Yeochun to Restart No. 3 Ethylene Plant After Inventory Drops

By Shinhye Kang

Dec. 9 (Bloomberg) -- Yeochun NCC Co., South Korea's largest ethylene producer, will restart its smallest plant today after a 20-day shutdown reduced inventories of the raw material used to make plastics and chemical products, a company official said.

The plant, known as the No. 3 cracker, will resume operations at 10 a.m. local time after it was shut on Nov. 19, said the official, who asked not to be identified because of company rules. The plant is capable of making 400,000 metric tons of ethylene from naphtha each year.

Yeochun had closed the plant after the global economic downturn cut ethylene demand. Prices of ethylene for loading in South Korea rose to $410 a metric ton in the week ended Nov. 28 from this year's low of $330 a ton reached two weeks earlier, according to data from industry publication Polymerupdate.

The ethylene maker plans to gradually increase the plant's operation rate to 85 percent, the official said. Yeochun's two bigger plants, capable of producing 857,000 tons and 555,000 tons of ethylene annually, are operating at full capacity, he said.

Yeochun plans keep the No. 3 cracker running because a drop in prices of naphtha, a refined oil product used to make ethylene, has helped improve margins, the official said.

Naphtha prices for cargoes loading in Singapore, Asia's biggest oil-trading center, have slumped 80 percent from a record $135.45 a barrel on July 4.

To contact the reporter on this story: Shinhye Kang in Seoul at skang24@bloomberg.net.



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Australia’s Newcastle Coal Port to Test Ship Arrival System

By Angela Macdonald-Smith

Dec. 9 (Bloomberg) -- Australia’s Newcastle port, the world’s biggest coal-export harbor, will test a new system to coordinate the arrivals of ships to help cut waiting times, reduce costs and improve safety.

The trial of the vessel arrival system, to start early next year, should help avoid accidents such as the grounding of the Pasha Bulker coal carrier on a beach near Newcastle harbor in June last year, New South Wales Ports and Waterways Minister Joe Tripodi said today in an e-mailed statement.

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



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Australian Dollar Weakens as Stocks Drop, Confidence Declines

By Candice Zachariahs

Dec. 9 (Bloomberg) -- The Australian dollar fell from near a three-week high as local stocks declined and an industry report showed business confidence fell to a record low last month. New Zealand’s dollar was little changed.

Australia’s currency also ended two days of gains before a government report this week that may show unemployment rose to a one-year high in November. Both currencies advanced earlier after President-elect Barack Obama’s stimulus plan boosted the prices of commodities, which account for more than half of the two nations’ overseas exports.

“There’s a view that some of the gains we’ve seen will be hard to sustain for stock markets,” said Tony Morriss, a senior currency strategist at Australia & New Zealand Banking Group in Sydney. “You’d expect the Aussie, or the risk-sensitive currencies, to run into resistance at higher levels.”

Australia’s currency fell 0.8 percent to 65.86 U.S. cents as of 12:49 p.m. in Sydney from late in Asia yesterday, when it touched 66.91 cents, the highest level since Nov. 14. The currency declined 1.4 percent to 61.09 yen.

New Zealand’s dollar traded at 54.27 U.S. cents, from 54.28 yesterday. It fell to 50.38 yen from 50.61 yen.

The Australian dollar declined after National Australia Bank Ltd. said its sentiment index for November fell 1 point to minus 30, the lowest level since the series began in 1989. The survey of more than 560 companies was conducted between Nov. 23 and Nov. 30.

Jobless Rate

The number of people employed in Australia may have fallen 15,000 in November, after gaining 34,300 the previous month, according to a Bloomberg News survey of economists before the statistics bureau’s Dec. 11 report. The unemployment rate may have climbed to 4.4 percent, the highest level since November 2007, from 4.3 percent, a separate Bloomberg survey showed.

The New Zealand dollar gained earlier after the government announced NZ$4.4 billion ($2.4 billion) of income tax cuts and said it would spend more on road and school construction.

Government plans “that are going to build infrastructure and so need commodities have improved underlying sentiment toward these countries,” said Tony Allen, head of currency trading at ANZ National Bank Ltd. in Wellington.

The UBS Bloomberg Constant Maturity Commodity index of 26 raw materials gained, ending six days of losses. as gold and crude oil, Australia’s third and fourth most valuable raw- material exports advanced. Raw materials account for 60 percent of Australia’s exports and 70 percent of New Zealand’s.

Australian government bonds were little changed with the 10-year yield at 4.30 percent, according to data compiled by Bloomberg. The price of the 5.25 percent security due March 2019 fell 0.035, or A$0.35 per A$1,000 face amount, at 107.797.

New Zealand’s two-year swap rate, a fixed payment made to receive floating rates, rose to 4.77 percent from 4.75 yesterday.

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

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China’s Industrial Output May Grow at Weakest Pace Since 1999

By Kevin Hamlin

Dec. 9 (Bloomberg) -- China’s industrial production probably grew at the weakest pace in nine years as exports slowed and the economy cooled, raising the likelihood of more interest-rate cuts and extra government spending.

Output rose 7.2 percent in November from a year earlier, according to the median estimate of 14 economists surveyed by Bloomberg News, down from 8.2 percent in October.

China needs to prepare for a “worst case scenario” as a global economic slump deepens, Central bank Governor Zhou Xiaochuan said Dec. 4. Exporters of toys, clothes and furniture are cutting production or closing down, triggering a surge in labor disputes and increasing the risk of social unrest in the world’s most populous nation.

“There will be more rate cuts and more fiscal easing,” said Ben Simpfendorfer, an economist with Royal Bank of Scotland Plc in Hong Kong.

Industrial-production growth would be the least since October 1999, excluding distortions caused in January and February each year by Lunar New Year holidays. The number is due Dec. 15.

Simpfendorfer predicts two rate reductions before year’s end and is poised to cut his forecast for China’s economic growth in 2009 to 5 percent from an 8 percent estimate, depending on data this week and next. That would be the least since 1990.

China’s leaders are holding an annual economic policy meeting in Beijing this week and may consider a package of measures to boost consumption, including cutting personal income tax, according to Kevin Lai, senior economist at Daiwa Institute of Research in Hong Kong.

Export, Import Slowdown

Exports climbed 14.8 percent from a year earlier, the slowest pace since March last year, according to the median estimate of 18 economists surveyed by Bloomberg News. Trade numbers may be released as early as today.

Imports increased 12 percent, the least in six years, as commodity prices fell and weakness in manufacturing and construction cut demand for raw materials, the survey showed.

The trade surplus may have been $32 billion, the second biggest on record. October’s trade gap was $35.2 billion.

A Chinese newspaper had a gloomier forecast for exports. Shipments may have fallen last month for the first time since June 2001, the 21st Century Business Herald said Dec. 7, citing an unidentified person. The lowest estimate in the Bloomberg survey was for a 10 percent gain.

Demand is waning because of recessions in Europe, Japan and the U.S., where retail sales fell last month by the most since data began in 1969.

Labor Disputes, Social Instability

In China, labor disputes almost doubled in the first 10 months of this year as businesses closed and some owners fled, the official China Daily newspaper reported Dec. 5.

Sacked workers rioted at a toy factory in Guangdong province last month and Zhang Ping, the nation’s top planner, warned of the risk of “massive unemployment” and “social instability.”

On Nov. 9, the State Council announced a 4 trillion yuan ($581 billion) stimulus package, mostly for public works. The central bank has also cut the key one-year lending rate to 5.58 percent from 7.47 percent in September and dropped quotas limiting lending by banks.

The “aggressive” monetary response is likely to continue, said Grace Ng, an economist with JPMorgan Chase & Co. in Hong Kong, who expects the rate to fall to 3.96 percent next year.

Falling Yuan

The yuan’s biggest one-day decline in three years on Dec. 1. also has prompted speculation that China may allow its currency to depreciate, helping exporters by making their products cheaper in overseas markets.

The yuan may weaken as much as 10 percent against the dollar, Morgan Stanley said last week. In contrast, Commerce Minister Chen Deming said that the nation won’t rely on currency depreciation to help exporters who are suffering because of shrinking demand.

Inflation may have cooled in November for the seventh straight month. Consumer prices rose 3.3 percent, according to another Bloomberg News survey. That figure is due on Dec. 11.

To contact the reporters on this story: Kevin Hamlin in Beijing at khamlin@bloomberg.net

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Euro Falls on Speculation German Economic Sentiment Weakened

By Stanley White

Dec. 9 (Bloomberg) -- The euro fell against the dollar before German economic sentiment data that may show pessimists outnumbered optimists for a 17th month, allowing more scope for the European Central Bank to lower interest rates.

The euro also declined against the yen as a recession in the euro-zone reduces the appeal of assets denominated in the currency. The South Korean won rose for a third day against the dollar on speculation official efforts to tackle the global economic crisis will boost Asian stocks and encourage overseas investors to buy the country’s shares.

“The euro is being pulled off its highs,” said Akio Shimizu, chief manager of foreign exchange trading in Tokyo at Mitsubishi UFJ Trust & Banking Corp., a unit of Japan’s largest publicly listed lender. “No one is expecting the ZEW survey to show anything flattering about the European economy.”

The euro declined to $1.2916 as of 10:06 a.m. in Tokyo from $1.2963 late yesterday in New York. It fell to 119.94 yen from 120.26, when it rose to 120.96, the highest since Dec. 1. The dollar was little changed at 92.83 yen.

The South Korean won rose 0.5 percent to 1,441.00 per dollar. The government will spend more than half of next year’s budget in the first half to help spur the economy, Vice Finance Minister Bae Kook Hwan said today.

ZEW

Investor confidence in German’s economy, Europe’s largest, worsened in December, the ZEW Center for European Economic Research’s index of investor and analyst expectations will probably show today. The index fell to minus 57 from minus 53.5 in the previous month, according the median estimate of 38 economists in a Bloomberg News survey. The data are due at 11 a.m. in Mannheim today.

ECB members Ewald Nowotny, Erkki Liikanen and Lorenzo Bini- Smaghi speak today. Risks to price stability in the 15 countries sharing the euro have fallen “significantly,” central bank President Jean-Claude Trichet said yesterday in an interview with the British Broadcasting Corp.

ECB forecasts published last week show the euro-region economy will shrink about 0.5 percent next year, which would be its first full-year contraction since 1993.

Stocks Gain

The MSCI Asia-Pacific index of regional shares rose 1.1 percent, for the third day of gains. The Standard & Poor’s 500 Index jumped 3.8 percent yesterday. Japan’s yen traded in the opposite direction of the index more than 90 percent of the time in the past month, data compiled by Bloomberg show.

Implied volatility on one-month dollar-yen options fell for a fifth straight day, dropping to 20.40 percent, indicating investors see less price fluctuation in the currency pair next month. The index jumped to 41.79 percent on Oct. 24, the highest level since 1995, when Bloomberg started to compile the data. A drop in volatility reduces the risk of the carry trade by making profits easier to predict.

New Zealand will cut income taxes by NZ$4.4 billion ($2.4 billion) and boost construction to help the economy out of recession, Governor-General Anand Satyanand said today.

In an NBC television interview on Dec. 7, Obama reiterated his commitment to the biggest investments in the nation’s infrastructure since the 1950s. The U.S. president-elect takes office Jan. 20. The European Union proposed a 200 billion euro ($258 billion) stimulus package last month.

U.S. Automakers

Congressional lawmakers sent President Bush a draft proposal to offer $15 billion in loans to U.S. automakers General Motors Corp., Chrysler LLC. Ford Motor Co. said it won’t seek short-term bridge loans. The rescue plan, which will help the firms survive at least until March, would require the president to appoint a person or board to oversee restructuring of the auto industry. The legislation is likely to be passed and signed into law this week, House Financial Services Committee Chairman Barney Frank said yesterday.

“Optimism over an agreement on a bailout for U.S. car companies is supporting global stock gains,” Masafumi Yamamoto, head of foreign exchange strategy for Japan at Royal Bank of Scotland Plc in Tokyo and a former Bank of Japan currency trader, wrote in a research note today. “This may force the yen lower.”

To contact the reporters on this story: Stanley White in Tokyo at swhite28@bloomberg.net

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Australia Stocks: Commonwealth Bank, BHP, Pacific Brands, Sino

By Ian C. Sayson

Dec. 9 (Bloomberg) -- The S&P/ASX 200 Index fell 28.40 points, or 0.8 percent, to 3,603.20 as of 12:07 p.m. in Sydney, after climbing earlier as much as 0.7 percent. The broader All Ordinaries Index fell 20.80, or 0.6 percent, to 3,533 while the futures contract due in December lost 1.2 percent to 3,599.

Banks: Commonwealth Bank of Australia (CBA AU), the nation’s biggest provider of mortgages, fell A$2.42, or 7.4 percent, to A$30.38 on prospects more share sales will follow after rival Westpac Banking Corp. said it plans to raise A$2.5 billion ($1.7 billion) through a share sale. National Australia Bank Ltd. (NAB AU), the largest by assets, decreased 56 cents, or 2.7 percent, A$20.40.

Westpac, which was been halted today from trading, said it will use the proceeds from the share sale to boost its capital.

Gold producers: Sino Gold Mining Ltd. (SGX AU), operator of China’s second-largest bullion producer, climbed 37 cents, or 12 percent, to A$3.45 after the precious metal ended a three-day slump. Newcrest Mining Ltd. (NCM AU), Australia’s largest gold producer, climbed A$1.07, or 4.1 percent, to A$27.74, heading for its highest close since Oct. 13.

Gold rose 2.1 percent to $772.70 an ounce on the New York Mercantile Exchange yesterday, following a three-day, 3.3 percent loss.

Mining shares: BHP Billiton Ltd. (BHP AU), the world’s largest mining company, increased A$1.24, or 4.6 percent, to A$28.45, set for its biggest gain this month after copper advanced for the first time in eight days. Rio Tinto Group (RIO AU), the world’s third-biggest mining company, added 90 cents, or 2.8 percent, to A$32.98.

Copper surged 8.7 percent yesterday in London, ending a seven-day, 19 percent slump as commodities and equities jumped after President-elect Barack Obama pledged to boost the U.S. economy with the biggest package of public-works spending since the 1950s.

Brambles Ltd. (BXB AU), the world’s biggest supplier of pallets used to move and store goods, decreased 12 cents, or 1.6 percent, to A$7.39, snapping a four-day, 14 percent advance. Citigroup Inc. downgraded the stock to “sell” from “hold” and cut its 12-month share price target for the stock to A$6.80 from A$7.20.

Harvey Norman Holdings Ltd. (HVN AU), Australia’s biggest furniture and electronics retailer, fell 7 cents, or 2.9 percent, to A$2.36, set for its biggest loss since Nov. 27. The company said its “retail margins continue to be under pressure.”

Fairfax Media Ltd. (FXJ AU), Australia’s second-largest newspaper publisher, gained 4 cents, or 2.8 percent, to A$1.49. Endemol NV has offered Fairfax A$160 million ($107 million) for its Southern Star television production and distribution division, the Australian Financial Review reported. Fairfax separately said discussions are still on-going and no agreement on price has been reached yet.

Oil Search Ltd. (OSH AU), Papua New Guinea’s biggest oil producer, gained 5 cents, or 1.2 percent, to A$4.31, extending yesterday’s 6.5 percent climb. Crude oil for January delivery rose $2.90, or 7.1 percent, to settle at $43.71 a barrel on the New York Mercantile Exchange yesterday. That is its biggest gain since Nov. 26.

Pacific Brands Ltd. (PBG AU), Australia’s largest clothing maker, fell for the sixth day, losing 2 cents, or 3.4 percent, to 56.5 Australian cents. The Melbourne-based underwear maker today cut its forecast first-half dividend to 3 cents as it seeks to conserve cash and comply with lending covenants.

Retail Food Group Ltd. (RFG AU), a Queensland state-based food brand manufacturer and franchiser, jumped 7 cents, or 6.2 percent, to A$1.20. The company said it reached an agreement with Allied Mills Ltd. for the sale of its central manufacturing facility that will raise about A$9.5 million, leaving Retail Food to focus on the development of franchise systems.

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

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Japan Stocks Rise on Commodities; Nippon Yusen Climbs on Fees

By Masaki Kondo

Dec. 9 (Bloomberg) -- Japanese stocks climbed after U.S. President-elect Barack Obama’s plan to boost infrastructure investment spurred a rally in commodities, outweighing a greater- than-estimated slump in Japan’s economy.

Inpex Corp., the nation’s largest oil explorer, added 6.3 percent, while copper producer Nippon Mining Holdings Inc. climbed 4.4 percent after prices for the metal rose the most in six weeks. Nippon Yusen K.K., Japan’s top shipping line, jumped 5.6 percent after transport fees for commodities rose for the first time in 14 days. Mitsui Fudosan Co. advanced 5.5 percent on a newspaper report Prime Minister Taro Aso is seeking measures to reinvigorate the domestic real estate market.

The Nikkei 225 Stock Average rose 135.22, or 1.6 percent, to 8,464.27 as of 9:42 a.m. in Tokyo. The broader Topix index rose 12.68, or 1.6 percent, to 824.76, with two shares rising for each that fell. Both gauges are down more than 40 percent this year.

“We are seeing a short-term bear rally,” Mamoru Shimode, chief equity strategist at Deutsche Bank AG, said in an interview with Bloomberg Television. “A rate cut and the weakening of the yen are needed for a larger, more sustainable gain in stocks.”

Obama said on Dec. 6 he will raise spending on roads, bridges and public spending, triggering a rally in commodities. Copper futures for March delivery added 9.1 percent yesterday, the biggest jump since Oct. 29, while crude oil for January delivery surged 7.1 percent to $43.71 a barrel, breaking a six- day losing streak. Oil has dropped 70 percent from a record $147.27 on July 11.

Shipping Lines

Inpex gained 6.3 percent to 570,000 yen, while Mitsubishi Corp., which gets more than half its earnings from commodities, leapt 5.9 percent to 1,157 yen. Nippon Mining, Japan’s biggest copper producer, soared 4.4 percent to 307 yen.

Nippon Yusen climbed 5.6 percent to 494 yen, and closest rival Mitsui O.S.K. Lines Ltd. rose 4.3 percent to 489 yen. The Baltic Dry Index, a measure of shipping costs for commodities advanced 1.2 percent yesterday, the first gain since Nov. 18.

Mitsui Fudosan, Japan’s biggest real-estate company, surged 5.5 percent to 1,304 yen, while Mitsubishi Estate Co. added 6.2 percent to 1,294 yen. Sumitomo Realty & Development Co. rose 4.5 percent to 1,290 yen.

Aso yesterday asked Land Minister Kazuyoshi Kaneko to revive the domestic real estate market, the Sankei newspaper reported, without saying where it obtained the information. Possible measures include financial support to real estate companies and home buyers, the Japanese-language newspaper said.

Deterioration ‘Accelerating’

Japan’s gross domestic product contracted at an annual 1.8 percent pace in the three months ended Sept. 30, the Cabinet Office said today before markets opened, more than the 0.4 percent reported last month. Economists surveyed by Bloomberg had predicted a 0.9 percent decline.

“The GDP report confirms that the economy’s deterioration is accelerating,” Fumikazu Onishi, a Tokyo-based senior strategist at Nikko Cordial Securities Inc., said in an interview with Bloomberg Television.

Rengo Co., Japan’s biggest maker of cardboard boxes, tumbled 7.1 percent to 672 yen. UBS AG cut its rating on the stock to “sell” from “neutral,” citing a possible decline in prices.

Nikkei futures expiring in December added 1.4 percent to 8,490 in Osaka and gained 1.5 percent to 8,470 in Singapore.

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

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Asian Stocks Gain for Third Day as Oil, Metal Prices Advance

By Patrick Rial

Dec. 9 (Bloomberg) -- Asian stocks climbed for a third day as government efforts worldwide to end the global recession drove commodity prices higher.

BHP Billiton Ltd., the world’s biggest mining company, gained 4.2 percent in Sydney after copper rose the most in six weeks. Mitsubishi Corp., which earns more than half its profit from commodities, advanced 4.4 percent in Tokyo as JPMorgan Chase & Co. reiterated its bullish stance on trading houses. Nintendo Co. jumped 5 percent after the company’s president said demand for its game players will hold up this year.

The MSCI Asia Pacific Index added 1 percent to 83.94 as of 10:28 a.m. in Tokyo, taking its advance in the past three days to 5.7 percent. The gauge has retreated 47 percent this year, set for the worst annual performance in its 20-year history. The index is valued at 12 times estimated profit, about a quarter below its level at the start of 2008.

Benchmark indexes in most markets open for trading advanced. Commonwealth Bank of Australia, the　nation’s largest lender, led the country’s banks lower after Westpac Banking Corp. announced plans to raise new capital.

Japan’s Nikkei 225 Stock Average rose 0.9 percent to 8,400.82. Gains were limited as the government revised its estimate of third-quarter growth to a 1.8 percent contraction. The worst financial crisis since the Great Depression has dragged the U.S., Europe and Japan into the first simultaneous recession since World War II.

Government Support

Today’s advance extended a rally that lifted the MSCI World Index yesterday to a four-week high. Stocks climbed as U.S. President-elect Barack Obama pledged the biggest government spending program since the 1950s, while India cut interest rates and announced a $4 billion stimulus package. Hong Kong will provide $12.9 billion of loan guarantees to help businesses, Donald Tsang, the city’s chief executive, said late yesterday.

In New York, the Standard & Poor’s 500 Index climbed 3.8 percent, extending its advance from an 11-year low last month to 21 percent. Futures on the measure lost 0.5 percent today.

Obama said on Dec. 6 he will raise spending on roads, bridges and public spending, triggering a rally in commodities. Copper futures in New York added 9.1 percent yesterday, the most since Oct. 29, while crude oil surged 7.1 percent to $43.71 a barrel, breaking a six-day losing streak. Oil has dropped 70 percent from a record $147.27 on July 11.

Mining and material companies are the worst performers this year among 10 industry groups on the MSCI Asia Pacific Index as the deepening global recession diminished demand for commodities.

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

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Oilsands Stocks Whipsawed by Merger Talk as Oil Falls

By John Kipphoff

Dec. 8 (Bloomberg) -- Canada’s oilsands miners, developing the largest reserves outside Saudi Arabia, are being roiled by takeover speculation after the 72 percent drop in crude prices delayed projects and ruined the outlook for profits.

Nexen Inc. and Opti Canada Inc., owners of the Long Lake oilsands mine in Alberta, soared as much as 53 percent last week on the Toronto Stock Exchange after the Financial Times said France’s Total SA planned a C$19.7 billion ($15.4 billion) offer for Nexen. Both retreated more than 10 percent a day later when the Times of London said Total won’t bid.

“There’s a risk you’ll see these companies go,” said John Stephenson, who helps to oversee about $1.5 billion, including Nexen and Opti shares, at First Asset Investment Management Inc. in Toronto. “They’re pretty much on bended knees at this point. The commodity is so much weaker now that it builds the case for takeovers.”

Companies from Royal Dutch Shell Plc to Suncor Energy Inc. are putting projects on hold after oil slid more than $106 a barrel as recessions in the U.S., Europe and Japan cut energy demand. Crude under $95 a barrel makes it unprofitable to develop oilsands, in which bitumen dug from mines or coaxed from the ground using steam is turned into oil, according to Ryan Todd, an analyst for Deutsche Bank AG in New York.

An equal-weighted index of four oilsands developers --Opti, Nexen, UTS Energy Corp. and Petro-Canada -- dropped 77 percent this year, compared with a decline of 38 percent in the Standard & Poor’s/TSX Composite Index, and a 39 percent retreat in a broader gauge of Canadian energy producers.

No Cash

Opti lost 88 percent in 2008 to C$1.95 after delaying expansion of the C$6.1 billion Long Lake mine, saying it doesn’t have enough cash. UTS, an investor in the C$25.3 billion Fort Hills, Alberta, project, became a penny stock, slipping from C$6.09 in May, while partner Petro-Canada retreated as much as 65 percent from its peak that month.

Nexen fell to its cheapest valuation on Oct. 10, when the shares traded for 3.2 times earnings over the previous 12 months. That’s 80 percent below the average price-to-earnings ratio over the past five years. Larger rival Suncor fell to 5.6 times earnings on Nov. 20, versus a five-year average of 23.

“It’s an opportunistic way to get in if you want to grow production and reserves,” said Gareth Watson, who helps manage about $46 billion as associate director at ScotiaMcLeod’s portfolio advisory group in Toronto. “The stocks are cheap on a historical basis. But it’s a timing issue. It depends on how long the recession will be and what oil prices do.”

Alberta’s tar-soaked sands may hold 173 billion barrels of oil, enough to supply the U.S. for about 24 years, according to the Canadian Center for the Study of Living Standards, an economic research firm based in Ottawa.

Fast Start

UTS, Petro-Canada, Opti and Nexen benefited from the surge in oil prices earlier this year, rising an average 24 percent through June, compared with a 4.6 percent gain in the S&P/TSX and a 22 percent advance in Canadian energy stocks, according to data compiled by Bloomberg.

As crude retreated, producers such as Royal Dutch Shell, based in The Hague, delayed decisions on oilsands development, while Suncor cut its 2009 capital budget by a third.

Suncor decreased 57 percent this year, while Canadian Oil Sands Trust, lead owner in Syncrude Canada Ltd., the biggest oilsands producer, is down 43 percent after reducing its dividend in October. Both companies are based in Calgary.

Costs Rise

Petro-Canada, also based in Calgary, raised the cost estimate for its Fort Hills project by more than half in September. Last month, it deferred until 2009 a final decision on the development, which it began when oil was trading above $80 a barrel. The company has already spent $1 billion on Fort Hills.

UTS trades at 82 cents, valuing it at C$389 million. The Calgary-based company must raise about $3 billion for Fort Hills, according to Andrew Potter, a UBS AG analyst in Calgary.

“One of the problems is how do you raise capital,” said First Asset’s Stephenson. “The smaller pieces are logical candidates for being taken out.”

Calgary-based Nexen surged as much as 33 percent to C$29.10 Dec. 2 after the Financial Times reported that Paris-based Total may bid C$38 a share. It fell as much as 24 percent, its steepest intraday drop in 21 years, a day later. Opti Canada rose more than 40 percent two days in a row in November.

“Longer-term, these assets are good,” said Francois Bourdon, who helps oversee about $14 billion as a senior portfolio manager at Fiera Capital Inc. in Montreal. “In the short run, the price of oil and the lack of available credit make these assets too expensive.

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

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Con-way, FedEx, GM, Texas Instruments, UPS: U.S. Equity Preview

By Lynn Thomasson

Dec. 8 (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 5:40 p.m. in New York, unless otherwise specified.

Standard & Poor’s 500 Index futures expiring in December slid 0.6 percent to 899.4. Dow Jones Industrial Average futures lost 45 points, or 0.5 percent, to 8,830. Nasdaq-100 Index futures dropped 5, or 0.4 percent, to 1,207.

Con-way Inc. (CNW US): The second-largest U.S. trucking company slashed its 2008 earnings forecast to as much as 20 percent less than the average estimate from analysts and cut 1,450 jobs as freight volumes fell. Con-way shares rose 3.5 percent to $25.77 in regular trading.

Danaher Corp. (DHR US): The maker of Craftsman tools said fourth-quarter profit will be lower than previously forecast and the company will cut 1,700 jobs. The stock rose 3.2 percent to $51.96 in regular trading.

FedEx Corp. (FDX US) sank 11 percent to $66.15 in trading after the official close of exchanges. The second-biggest U.S. package-shipping company lowered its fiscal 2009 earnings forecast to no more than $4.75 a share from as much as $5.25, blaming the “significantly weaker” economy.

United Parcel Service Inc. (UPS US) fell 4.5 percent to $56.

General Motors Corp. (GM US), whose shares surged 21 percent today in regular trading, dropped 5.7 percent to $4.65. Congressional Democrats sent President George W. Bush a draft proposal for a $15 billion, short-term rescue of U.S. automakers and said it will likely be voted on this week. Final details are yet to be worked out and White House officials said they don’t agree with all parts of the legislation.

Ford Motor Co. (F US), the second-biggest U.S.-based automaker, declined 7.4 percent to $3.13.

National Semiconductor Corp. (NSM US) slid 7.3 percent to $9.54. The maker of chips for the five largest mobile-phone makers forecast third-quarter sales that trailed analysts’ estimates as the U.S. recession damped demand for handsets.

Texas Instruments Inc. (TXN US) lost 3.8 percent to $14.25. The second-largest U.S. chipmaker predicted sales and profit that missed analysts’ estimates as the economic slump cut into demand for electronics.

To contact the reporter on this story: Lynn Thomasson in New York at lthomasson@bloomberg.net.

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Stocks Rally Worldwide, Dow Hits One-Month High on Obama Plan

By Whitney Kisling

Dec. 8 (Bloomberg) -- Stocks rose around the world, sending the Dow Jones Industrial Average to a one-month high, as President-elect Barack Obama pledged to boost the economy with the biggest public-works spending package since the 1950s.

The Standard & Poor’s 500 Index extended its gain from an 11-year low last month to 21 percent. U.S. Steel Corp. and Alcoa Inc. climbed at least 17 percent, while Chevron Corp. added 4.9 percent, as Obama’s plan to improve infrastructure triggered gains in commodities. General Motors Corp. jumped 21 percent as lawmakers agreed in principle with the White House to provide funds to shore up the car industry.

“Hopefully it helps get the economy turned around, jumpstarting private spending with public spending,” said Bill Stone, who helps oversee about $56 billion as chief investment strategist at PNC Wealth Management in Philadelphia. “That’s the whole point of this is to try to get that jumpstart going.”

The S&P 500 surged 3.8 percent to 909.7, with all 10 industry groups advancing. The Dow added 298.76 points, or 3.5 percent, to 8,934.18 and earlier rose above 9,000 for the first time in a month. The Nasdaq Composite Index increased 4.1 percent to 1,571.74. Five stocks gained for each that fell on the New York Stock Exchange.

The S&P 500 has climbed in nine of the 11 trading sessions since Nov. 20, in part on speculation the Federal Reserve will cut interest rates and Congress will step up efforts to boost the economy. The benchmark index is still down 38 percent in 2008 after the collapse of the subprime mortgage market reduced average profits for five straight quarters.

‘Mad Bull’

All 10 industry groups in the S&P 500 have risen at least 9.2 percent since the U.S. benchmark sank to its 11-year low on Nov. 20. Financial stocks led the rally, climbing 46 percent collectively, followed by consumer discretionary and telephone companies.

Today’s gains put a technical end to the 13-month bear market that began after the S&P 500 reached a record close of 1,565.15 in October 2007. An advance of more than 20 percent from a low is the standard definition of a bull market.

“If it’s a bull it’s a mad bull, a very confused bull,” said John Carey, a Boston-based fund manager at Pioneer Investment Management, which oversees about $200 billion. “People are looking at the ruins of the stock market and saying there’s awfully cheap stocks. That’s different from strong conviction prices are moving in an upward direction because of improving fundamentals.”

The S&P 500 Financials Index is still down 53 percent this year, as credit-related losses and writedowns at banks and financial firms climbed to $981.2 billion worldwide amid the worst economic slump since the Great Depression.

‘Dramatic Action’

Obama said Dec. 6 he will boost investment in roads, bridges and public buildings to create or preserve 2.5 million jobs after companies cut payrolls at the fastest pace in 34 years last month.

“There’s an awareness now that this is across the board,” Laszlo Birinyi, president of Birinyi Associates Inc. in Westport, Connecticut, told Bloomberg Television. “A Band-Aid here and a Band-Aid there is not going to form a solution. You’ve got to really take some dramatic action, and I think that’s what investors are responding to today.”

U.S. Steel Corp. helped lead gains among raw material producers in the S&P 500 with a 24 percent advance to $35.79, its biggest gain in at least 17 years. The second-largest U.S. steelmaker was raised to “conviction buy” by Goldman Sachs Group Inc. analysts, who predicted steel prices are on the verge of rebounding after supply cuts outpaced the global collapse in demand.

Commodities Rally

Olympic Steel Inc. gained 25 percent to $19.02 after Goldman raised it to “buy” from “neutral.” AK Steel Holding Corp., the fourth-largest U.S. steelmaker, added 26 percent to $8.99.

Alcoa Inc., the largest U.S. aluminum maker, jumped $1.43 to $9.58. Freeport-McMoRan Copper & Gold Inc., the largest publicly traded copper producer, added 19 percent to $20.01.

Raw materials producers in the S&P 500 climbed 7.7 percent as a group for the biggest advance among 10 industries.

Commodity prices rebounded from last week’s losses on speculation Obama’s spending on roads, bridges and school repairs will boost demand. Copper rallied more than 9 percent, while crude climbed 7.1 percent to $43.71 a barrel.

Exxon Mobil Corp., the world’s largest oil company, climbed 3.9 percent to $79.60. Chevron, the second-biggest, increased $3.67 to $78.09.

Chesapeake Energy Corp. surged 24 percent to $14.08 for the steepest gain since April 1999. The second-biggest independent U.S. natural-gas producer said it will cut spending and plans to build cash resources because of a plunge in energy prices.

Construction, Automakers

Construction-equipment makers rallied, with Caterpillar Inc., the world’s largest maker of backhoes and excavators, adding 11 percent to $42.42. Manitowoc Co., the construction- crane maker based in the Wisconsin city of the same name, rose 18 percent to $8.80.

GM, the largest U.S. automaker, rallied the most in the Dow average, adding 85 cents to $4.93. Ford Motor Co., the second- biggest, surged 24 percent to $3.38.

Congress and the Bush administration are close to agreeing on the details of a $15 billion, short-term rescue plan for the auto-industry that will probably be passed and signed into law this week, House Financial Services Committee Chairman Barney Frank said.

House Speaker Nancy Pelosi also dropped her opposition to drawing on $25 billion in funds from the Energy Department intended to help carmakers develop more fuel-efficient vehicles, according to a Democratic aide who declined to be identified.

Merger Speculation

NYSE Euronext jumped 23 percent to $26.21. Deutsche Boerse AG said it explored a merger offer for the world’s biggest owner of stock exchanges. The talks “ended without any conclusion,” Deutsche Boerse said.

NASDAQ OMX Group Inc. increased 9.1 percent to $25.47. The FTSE/Mondo Visione Exchanges Index, which tracks 17 of the world’s publicly traded exchanges, rose 14 percent.

JPMorgan Chase & Co. gained 9.4 percent to $36.49 after it was raised to “buy” from “neutral” by Ladenburg Thalmann Inc. analyst Dick Bove, who said the bank’s acquisition of Washington Mutual Inc. should contribute “meaningfully” to earnings.

End to ‘Hysteria’

“Additionally, the hysteria surrounding the banking industry is likely to come to an end in 2009 as these companies continue to report earnings,” Bove wrote in a note.

Bank of America Corp. rallied 17 percent to $17.84, while Citigroup Inc. added 9.9 percent to $8.47. The S&P 500 Financials Index advanced 6.9 percent.

Sun Microsystems Inc. climbed after agreeing to let its biggest shareholder pick two new independent directors, giving Southeastern Asset Management Inc. more authority to guide a restructuring. Sun, the server maker that has lost 79 percent of its value this year, rallied 9.7 percent to $3.83.

3M Co. posted the biggest decline in the Dow average after the maker of products from Post-it Notes to electronic road signs said it may need to cut more jobs next year, after eliminating 2,300 this quarter. 3M slipped 4.1 percent to $57.38.

Obama’s plan to boost the economy with a “substantial” infrastructure stimulus package triggered a global rally, with the MSCI World Index jumping 5.5 percent.

Global Rally

Benchmark indexes in Germany and France added 7.6 percent and 8.7 percent respectively, while Tokyo’s Nikkei 225 climbed 5.2 percent.

Siemens AG, Europe’s largest engineering company, jumped 10 percent to 49.40 euros. Hochtief AG, Germany’s biggest builder, added 16 percent to 30.94 euros. Royal Dutch Shell Plc, Europe’s biggest energy producer, advanced 8.3 percent to 1,691 pence in London.

Komatsu Ltd., the world’s No. 2 maker of construction machinery, rose 11 percent to 1,007 yen. India’s biggest mortgage lender, Housing Development Finance Corp., added 5.7 percent to 1,511.95 rupees.

Stocks had fallen so far this year that 2,267 companies around the globe offered profits to investors for free as of the open of trading today. That’s eight times as many as at the end of the last bear market, when the shares rose 115 percent over the next year.

Bank of New York Mellon Corp., Danieli SpA in Buttrio, Italy, and Seoul-based Namyang Dairy Products Co. held more cash than the value of their stock and debt as the slowing world economy wiped out $32 trillion in capitalization this year. Companies in the MSCI World Index traded for an average $1.17 per dollar of net assets, the lowest since at least 1995, and 39 percent sold at a discount to shareholder equity as of the open, data compiled by Bloomberg show.

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

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Canada Stocks Rally on U.S. Stimulus; Potash, EnCana, BCE Gain

By John Kipphoff

Dec. 8 (Bloomberg) -- Canadian stocks rose the most this month, led by resource and bank shares, as oil, metals and grains appreciated on speculation the biggest U.S. public works spending plan since the 1950s will boost demand for commodities.

Potash Corp. of Saskatchewan Inc. jumped a record 14 percent and EnCana Corp. rose 9 percent, pacing energy producers’ and miners’ rebound from three days of decline. Toronto-Dominion Bank jumped more than 5 percent, leading finance shares higher. BCE Inc. surged as much as 31 percent after it received an auditor’s opinion that company would be solvent after its C$52 billion leveraged buyout.

The Standard & Poor’s/TSX Composite Index rose 5.6 percent to 8,567.12 in Toronto, the most this month, after losing 12 percent last week when oil had its biggest drop since 1991.

“Stocks are already discounting a huge amount of economic decline,” David Cockfield, who helps oversee about $2 billion as a portfolio manager at Leon Frazer & Associates in Toronto. “Authorities are throwing trillions of dollars at the system to make sure we don’t go into a depression. If you’re sitting on some cash, this is probably a good time to dip into the market.

Stocks rallied worldwide on U.S. President-elect Barack Obama’s pledge to boost investment in infrastructure to create or preserve 2.5 million jobs. A report last week showed U.S. employers cut 533,000 workers last month, adding to concern that a recession in the U.S., Canada’s biggest trade partner, is getting worse. U.S. lawmakers were also working today to reach an agreement on aid to automakers.

Oil, Copper

Oil rose for the first time in seven days, adding 7.1 percent to $43.71 a barrel in New York. Oil has slid more than $103 from a record in July. Copper jumped 9.1 percent to $1.498 a pound and gold added 2.3 percent to $769.30 an ounce. Corn rose the most in more than five weeks in Chicago.

Potash, the largest maker of fertilizer, added C$9.49, or 14 percent, to C$76.99, the biggest increase since at least November 1989. Barrick Gold Corp., the largest bullion mining company in the world, advanced 7.1 percent to C$34.35. Smaller rival Goldcorp Inc. added 8.2 percent to C$30.12. Teck Cominco Ltd., Canada’s biggest diversified mining company, rose 8.1 percent to C$4.25.

EnCana, Canada’s largest energy company by market value, added 9.3 percent to C$55.61, its biggest gain since Nov. 21. Suncor Energy Inc., the world’s second-largest oil-sands producer, rose 6.6 percent to C$23.30. Canadian Oil Sands Trust, the biggest tarsands miner, gained 12 percent to C$21.97. Canadian Natural Resources Ltd. climbed 7.3 percent to C$42.20.

Measures of raw-materials and energy shares added 9.2 percent and 6.7 percent, paring their respective declines this year to 43 percent and 39 percent.

Annual Drop

The S&P/TSX, which gets almost three-quarters of its value from energy, mining and finance shares, has still fallen 38 percent in 2008, poised for its worst annual drop, as the U.S., Europe and Japan entered recessions, curbing global demand for commodities, which account for about half of Canada’s exports

“Commodities have been grossly oversold,” Cockfield said. “There’s some positive feeling out there today and some people are willing to step in. Maybe we’re through the worst. Mind you, we’ve had a number of false starts already.”

Toronto-Dominion rose 5.3 percent to C$45.50. Canada’s second-largest bank reported a 7.3 percent drop in fourth- quarter profit to C$1.01 billion ($800.5 million) last week on losses from credit trading investments, and sold as much as C$1.38 billion in new stock to shore up capital.

Royal Bank of Canada climbed 3 percent to C$37.50.

‘Action List’

Canadian Imperial Bank of Commerce advanced 7.1 percent to C$53.27. The country’s fifth-largest lender, which also reported results last week, was raised to “action list buy” from “buy” at TD Newcrest. CIBC’s writedowns in the fourth quarter were smaller than “feared,” TD Newcrest analyst Jason Bilodeau in Toronto wrote in an e-mailed note.

“Coming out of the quarter the bank appears to be well capitalized and we believe that the worst, although not all, of the writedowns are behind us,” Bilodeau wrote.

Laurentian Bank of Canada gained 11 percent to C$36.50. Investors should buy the stock, recommended Merrill Lynch & Co. analyst Sumit Malhotra, citing a “spectacular 2008,” which saw the bank report better-than-expected profit and declining bad loans in the fourth quarter.

BCE rose C$1.80, or 7.9 percent to C$24.65. Earlier the stock surged as much C$7.15, or 31 percent, for its steepest intraday gain in at least 25 years.

The pending acquisition hinges on an auditor’s determination that the combined company would be viable after the scheduled close on Dec. 11. The assessment, from PricewaterhouseCoopers LLP, is contrary to an analysis by rival accounting firm KPMG LLC last month.

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

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Markets Trading in Narrow Ranges

Daily Forex Fundamentals | Written by Crown Forex | Dec 08 08 15:07 GMT |

A light week but optimism is still fulfilling markets, the European and the Asian indices inclined in the early morning retrieving back some of the losses that was seen last week, where Obama the new elected president is preparing a fiscal plan which could bolster the US economy and mitigate the ongoing turmoil. Today markets lacked any major fundamentals and news that could affect the its movements, as the movement seen is considered to be a pure technical one; the Euro inclined in the European session to record a high of 1.2915 as its currently trading at 1.2904 levels, a resistance will seen at 1.2944 levels. The British pound managed to incline against the US dollar, where it recorded a high of 1.5046 but retrieved back again to currently trade at 1.4864 levels, an upside potential is seen for the pound according to the technical indicators. The US dollar is trading in narrow ranges but it managed to incline slightly against the Japanese Yen where the optimism in markets increased slightly the risk appetite. The pair recorded a high of 93.90 but retreated back to trade currently at 93.18 levels. Crown Forex disclaimer:The above may contain information for investors/traders and is not a recommendation to buy or sell currencies, gold, silver & energies, nor an offer to buy or sell currencies, gold, silver & energies. The information provided is obtained from sources deemed reliable but is not guaranteed as to accuracy or completeness. I am not liable for any losses or damages, monetary or otherwise that result. I recommend that anyone trading currencies, gold, silver & energies should do so with caution and consult with a broker before doing so. Prior performance may not be indicative of future performance. Currencies, gold, silver &energies presented should be considered speculative with a high degree of volatility and risk.

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