BMW, Commerzbank, Daimler, Metro, Porsche: German Stock Preview

By Nadja Brandt and Aaron Kirchfeld

Jan. 6 (Bloomberg) -- The following is a list of companies whose shares may have unusual price changes in Germany. Stock symbols are in parentheses, and share prices are from the previous close.

DAX Index futures expiring in March gained 12, or 0.2 percent, to 5,005 as of 8:28 a.m. in Frankfurt. The DAX climbed 0.2 percent to 4,983.99 yesterday.

Allianz SE (ALV GY): Dresdner Bank, the lender being sold by the insurer to Commerzbank AG, may seek financial aid from the German government, Handelsblatt said. Allianz and Commerzbank may have held talks with the bank-rescue package fund, the newspaper said. Simultaneously, Commerzbank may also be looking for guarantees from Allianz for Dresdner Bank securities, the newspaper reported.

Allianz fell 22 cents, or 0.3 percent, to 76.93 euros.

Bayerische Motoren Werke AG (BMW GY): The world’s largest maker of luxury cars said U.S. sales declined 36 percent last month to 21,626 cars and sport-utility vehicles. The shares dropped 49 cents, or 2.2 percent, to 21.86 euros.

Commerzbank AG (CBK GY): The bank plans to issue a state- guaranteed bond this week valued at 1 billion euros ($1.4 billion) to 2 billion euros to fund its takeover of Dresdner Bank, the Financial Times Deutschland reported, citing unidentified market participants. The shares retreated 21 cents, or 3.1 percent, to 6.56 euros.

Continental AG (CON GY): The German tire and auto-parts maker might be active after the Nikkei newspaper said Japanese competitor Bridgestone Corp. may post an operating profit of about 100 billion yen ($1.07 billion) for the year through Dec. 31, down 15 percent from an estimated profit for last year. Continental gained 5 cents, or 0.2 percent, to 30.50 euros.

Daimler AG (DAI GY): The world’s second-largest maker of luxury cars said U.S. sales by its Mercedes-Benz Cars division fell 24 percent in December from a year earlier. The unit sold 20,848 cars and sport-utility vehicles last month, while full- year deliveries declined 1.5 percent to 249,750 vehicles. The shares dropped 1.10 euros, or 4 percent, to 26.65.

Deutsche Bank AG (DBK GY): The country’s biggest bank got regulatory approval for its Chinese securities joint venture, allowing it to underwrite bond and stock sales in the world’s fastest-growing major economy. The shares fell 35 cents, or 1.2 percent, to 28.80 euros.

Deutsche Boerse AG (DB1 GY): The operator of the Frankfurt stock exchange is in talks to buy a majority in Neonet AB of Sweden, Handelsblatt reported. The stock advanced 1.25 euros, or 2.3 percent, to 55.50.

Deutsche Euroshop AG (DEQ GY): The country’s biggest investor in shopping centers was downgraded to “hold” from “buy” by Equinet AG. The stock added 17 cents, or 0.7 percent, to 25.46 euros.

Deutsche Telekom AG (DTE GY): Europe’s largest telephone company may name Thomas Winkler, a former finance chief at its T- Mobile wireless unit, as chief financial officer for the parent company to replace Karl-Gerhard Eick, Focus-Money reported, without saying where it got the information.

Deutsche Telekom shares climbed 37 cents, or 3.4 percent, to 11.39 euros.

Hochtief AG (HOT GY): The country’s largest construction company confirmed its 2008 forecast after its Australian unit Leighton Holdings Ltd. reported lower first-half profit on investment writedowns. The stock increased 65 cents, or 1.8 percent, to 36.25 euros.

Metro AG (MEO GY): The owner of Media Markt and Saturn consumer-electronics shops was cut to “underperform” from “buy” by Merrill Lynch & Co. The stock gained 72 cents, or 2.4 percent, to 30.18 euros.

Porsche SE (PAH3 GY): The carmaker bought additional shares in Volkswagen AG and will boost its stake in Europe’s biggest auto manufacturer to more than 50 percent, attaining indirect control over Sweden-based Scania AB. Porsche dropped 3.78 euros, or 6.6 percent, to 53.88.

Premiere AG (PRE GY): The country’s biggest pay-television company had its share-price estimate raised 37 percent to 8.2 euros by JPMorgan Chase & Co. The stock fell 14 cents, or 3.6 percent, to 3.80 euros.

SMA Solar Technology AG (S92 GY): The producer of alternating-current converters was downgraded to “neutral” from “buy” at Merrill Lynch & Co. The stock rallied 1.12 euros, or 2.8 percent, to 40.52.

Volkswagen AG (VOW GY): Europe’s biggest automaker gained U.S. market share in December as small cars such as the Jetta and Golf helped limit its sales decline. The stock slipped 4.36 euros, or 1.7 percent, to 254.74.

To contact the reporter on this story: Nadja Brandt in Los Angeles at nbrandt@bloomberg.net; Aaron Kirchfeld in Frankfurt at akirchfeld@bloomberg.net

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British Airways, Debenhams, Next: U.K., Irish Equity Preview

By Andrew MacAskill

Jan. 6 (Bloomberg) -- The following is a list of companies whose shares may have unusual price changes in U.K. and Irish markets today. Stock symbols are in parentheses and prices are from the last market close.

The benchmark FTSE 100 Index rose 17.85, or 0.4 percent, to 4,579.64. The FTSE All-Share Index advanced 0.6 percent to 2,288.04, and Ireland’s ISEQ Index gained 3.4 percent to 2,501.88.

U.K. companies:

Antofagasta Plc (ANTO LN): The copper producer controlled by Chile’s Luksic family submitted a $21.7 million power-line project to a Chilean regulator for approval. The stock declined 13.5 pence, or 2.9 percent, to 458.

British Airways Plc (BAY LN): Europe’s third-largest airline will report traffic figures for December. The shares gained 2.1 pence, or 1.2 percent, to 182.3 pence.

Carpetright Plc (CPR LN): The U.K.’s largest carpet retailer will consider buying weaker rivals in a year’s time, the Financial Times reported, citing Philip Harris, founder and chief executive officer. The shares fell 4 pence, or 1.1 percent, to 350 pence.

Debenhams Plc (DEB LN): The second-largest U.K. department- store company said a sales drop slowed on demand for exclusive fashions in the Designers at Debenhams range. The stock rose 3 pence, or 12 percent, to 28.5 pence.

Dunelm Group Plc (DNLM LN): The U.K. operator of Dunelm Mill homeware stores said total sales rose 2.3 percent in the 26 weeks ended Dec. 27, while like-for-like sales fell 5.6 percent. The shares dropped 2 pence, or 1.5 percent, to 130 pence.

Next Plc (NXT LN): The U.K.’s second-largest clothes retailer reported a decline in revenue and maintained its full- year profit forecast. The stock fell 18 pence, or 1.6 percent, to 1,091.

Irish Companies:

CRH Plc (CRH ID): The world’s second-biggest building materials maker said second-half pretax profit will drop by a “high-teen” percentage following a slump in construction in Europe and other markets. The shares rose 40 cents, or 2.2 percent, to 18.80 euros.

To contact the reporter on this story: Andrew MacAskill in London at amacaskill@bloomberg.net.

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European Stock-Index Futures Gain; Rio Tinto Shares May Rise

By Adam Haigh

Jan. 6 (Bloomberg) -- European stock-index futures rose, indicating the Dow Jones Stoxx 600 Index may extend a five-day rally, as government efforts to revive the global economy overshadowed a slump in consumer confidence in the U.K.

Rio Tinto Group gained 2.7 percent in Australia as copper jumped to the highest in almost a month in Asia. Next Plc, the U.K.’s second-largest clothes retailer, may advance after maintaining its full-year profit forecast. Telenor ASA, Norway’s largest phone company, may increase as Morgan Stanley advised clients to buy the shares.

The Stoxx 600 has rebounded 15 percent since Nov. 21 as investors speculated that U.S. President-elect Barack Obama will stimulate the world’s biggest economy with tax cuts and the largest infrastructure investment since the 1950s, while the Federal Reserve cut interest rates to as low as zero percent.

“Equities now appear to be regaining a bit of confidence,” Roger Nightingale, who helps oversee about $1.1 billion as a London-based strategist at Pointon York Ltd., said in an interview on Bloomberg Television. “What is important is what the Fed and central banks are doing. What they have done is create liquidity.”

Futures on the Dow Jones Euro Stoxx 50 Index, a benchmark for the euro region, added 0.5 percent to 2,564 at 7:46 a.m. in London. The U.K.’s FTSE 100 Index is set to open 11 points higher, according to IG Markets.

The MSCI Asia Pacific Index climbed for a ninth day, adding 0.1 percent. Futures on the Standard & Poor’s 500 Index increased 0.2 percent. The benchmark index for American equities fell for the first time in four days yesterday on concern that a slump in corporate profits will stretch into 2009.

U.K. Consumer Confidence

A deepening recession and rising unemployment sent consumer confidence in the U.K. to the lowest since at least 2004 in December, Nationwide Building Society said.

An index of sentiment fell four points from a month earlier to 47, the worst since the survey began four years ago, the mortgage lender said in a statement today. The reading, taken from a survey of 1,000 people between Nov. 17 and Dec. 14, compares with 84 points a year earlier.

Rio Tinto, the world’s third largest mining company, added 2.7 percent to A$43.42. Copper rallied 3.8 percent in London.

Next may rise. The retailer said its full-year profit forecast remains “in line with our previous expectation” as it reported a decline in revenue.

Telenor may gain. Morgan Stanley raised its recommendation on the stock to “overweight” from “equal-weight.”

Logitech, U.K. Banks

Logitech International SA may drop after the world’s biggest maker of computer mice withdrew its fiscal 2009 financial targets and said it will cut 15 percent of its salaried workforce because of the deepening global recession.

U.K. financial shares may move. Royal Bank of Scotland Group Plc, Barclays Plc, HBOS Plc and 31 other British financial companies will no longer have protection from short-selling, Britain’s financial regulator said yesterday.

The temporary ban on short-selling, introduced in September after politicians and investors blamed the practice for market instability, will expire on Jan. 16, the Financial Services Authority said. The London-based agency said it could be reintroduced without consultation if necessary.

An index of companies that the FSA prohibited hedge funds and other investors from shorting fell three times more than the broader FTSE All-Share Index, data compiled by Bloomberg show.

Metro AG, Germany’s largest retailer, may slide after Merrill Lynch & Co. cut its recommendation on the shares to “underperform” from “buy.”

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

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Morgan Stanley Loses Ground in M&A to Moelis, Perella Boutiques

By Poppy Trowbridge and Serena Saitto

Jan. 6 (Bloomberg) -- Morgan Stanley lost ground counseling companies on takeovers last year as boutique advisory firms Moelis & Co. and Perella Weinberg Partners gained market share in the slowest period for deal-making since 2003.

Goldman Sachs Group Inc., JPMorgan Chase & Co. and Citigroup Inc. were the world’s top three advisers on mergers and acquisitions in 2008, data compiled by Bloomberg show. The three New York-based firms advised on $1.8 trillion of takeovers in all, a 44 percent decline from the previous year’s total of $3.2 trillion. Morgan Stanley dropped three places from second spot, working on bids worth 61 percent less than in 2007.

Muscling their way into the top 20 for the first time were Moelis & Co., the firm started by former UBS AG investment banking president Kenneth Moelis, 50, and Perella Weinberg. Moelis, who started his company 18 months ago in Los Angeles, worked on deals such as InBev NV’s $60 billion purchase of Anheuser-Busch Cos. The firms are gaining after the pace of leveraged buyouts slumped as banks balked at funding the takeovers.

“We are not private equity-dependent for our revenue, and we do not provide financing, so we did well in a year when M&A was down,” Joseph Perella, founder and chairman of the New York- based firm, said in an interview. “2008 reflects the fact that the firm benefits from turmoil in the market.”

Mergers and acquisitions dropped 38 percent last year to $2.5 trillion, weighed down by lack of financing and falling stock markets. LBOs slumped, plummeting 74 percent in the Americas alone. The MSCI World Index fell 42 percent as losses and writedowns at the world’s largest banks topped $1 trillion and the U.S., Europe and Japan entered the first simultaneous recessions since World War II.

‘Distressed Environment’

“We’re in a very distressed environment,” said Marco Boschetti, head of global mergers, acquisitions and restructuring at Towers Perrin, a consulting firm in London. “We are seeing fewer deals being done, and transactions taking place with lower fees as the market shrinks.”

New York-based Morgan Stanley, which received a $10 billion infusion last year from the U.S. government and converted to a bank overseen by the Federal Reserve, relinquished the No. 2 spot it held in 2007 to JPMorgan. Morgan Stanley ranked fifth in 2008, the position bankrupt Lehman Brothers Holdings Inc. held the previous year. A spokesman for Morgan Stanley in London declined to comment on the rankings.

Companies are turning to independent advisers because the firms can devote senior bankers, give advice independent of financing arrangements and offer more hands-on management, according to Philip Keevil, senior partner at London-based Compass Advisers LLP.

‘Seismic Shift’

“A seismic shift has taken place on Wall Street and in the City of London,” Keevil said. “We’ve had a reversal of the Big Bang, and we’re going back to basics separating advice from sources of finance,” he said. Margaret Thatcher’s government deregulated U.K. financial markets and relaxed restrictions on owning stockbrokers in 1986, an event known as “Big Bang.”

Moelis helped advise London’s Taylor Nelson Sofres Plc on its $1.8 billion sale to WPP Plc in October. Perella Weinberg advised WPP, along with Goldman Sachs and Merrill Lynch. Perella also counseled Continental AG, the German auto-parts maker that was the target of a hostile $17.6 billion bid by Schaeffler KG.

Turmoil in the credit markets led companies to abandon 755 transactions worth a combined $637 billion, including BHP Billiton Plc’s $146 billion pursuit of Rio Tinto Group and Microsoft Corp.’s withdrawn $42 billion bid for Yahoo! Inc.

‘Right and Reasonable’

Jumbo takeovers, of $10 billion or more, won’t be totally absent in 2009, according to Gordon Dyal, Goldman Sachs’s global head of mergers and acquisitions.

Large transactions will return when the premium and the price are “right and reasonable” for the buyer, Dyal, 47, said in a telephone interview. “And when sellers re-adjust their price expectations in light of this market.”

Goldman Sachs, which reported its first quarterly loss in December, maintained its preeminence among M&A advisers after working on $666 billion in deals last year.

JPMorgan, the only one of 2007’s top five advisers to rise in the rankings, jumped to second place from fourth, advising on deals valued at about $562 billion, less than half the total of its 2007 deals. Citigroup retained third place, advising on more than 260 deals worth $556 billion in all. The banks declined to comment when contacted by Bloomberg News.

London-based Barclays Capital and Tokyo-based Nomura Holdings Inc. also entered the top 20 dealmakers, climbing to 11th and 12th places respectively, following their purchase of Lehman’s advisory units after the securities firm collapsed in September.

That same month, the U.S. government placed two of the country’s largest mortgage lenders under conservatorship and bailed out insurer American International Group Inc. In October, the U.K. government announced a 37 billion-pound ($54 billion) rescue package for the country’s largest retail banks.

To contact the reporter for this story: Poppy Trowbridge in London at ptrowbridge@bloomberg.net; Serena Saitto in New York at ssaitto@bloomberg.net.

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Braskem, Petrobras, Perdigao, Suramericana: Latin Preview

By Paulo Winterstein and James Attwood

Jan. 6 (Bloomberg) -- The following companies may have unusual price changes today in Latin America trading. Stock symbols are in parentheses and share prices reflect the previous close.

The MSCI Latin America Index rose 3 percent yesterday to 2,277.06.

Brazil

Perdigao SA (PRGA3 BS): Brazil’s biggest food company said it decided to relocate dairy production from two of its plants, leading to 233 job cuts. Perdigao fell 0.8 percent to 31.76 reais.

Votorantim Celulose & Papel SA (VCPA4 BS): Brazil’s third- biggest pulp maker said yesterday that shareholder Barclays Plc sold 118,200 preferred shares, reducing its stake in VCP to 5 percent. VCP rose 2.3 percent to 19.26 reais.

Petroleo Brasileiro SA (PETR4 BS) and Braskem SA (BRKM5 BS): Petrobras, as the state-controlled oil company is known, and Braskem, Latin America’s largest petrochemical company, are looking to build an $800 million petrochemical plant that would produce ammonium nitrate and fertilizer for Peru’s mining and agriculture industries. Peru plans to build a petrochemical complex in the southern port of Marcona, the Andean country’s Energy & Mines Minister Pedro Sanchez Gamarra said yesterday. Petrobras rose 2.3 percent to 25.10 reais. Braskem climbed 6.9 percent to 6.04 reais.

Colombia

Suramericana de Inversiones SA (SURAMIN CB): The holding company with financial services, cement and food assets was reiterated “buy” at brokerage Interbolsa SA. Suramericana rose 0.5 percent to 15,580 pesos.

To contact the reporters on this story: James Attwood in Santiago at jattwood3@bloomberg.net; Paulo Winterstein in Sao Paulo at pwinterstein@bloomberg.net

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Australian Services Sector Shrinks for Ninth Month in December

By Jacob Greber

Jan. 6 (Bloomberg) -- Australian demand for services shrank for a ninth month in December, adding to signs the economy may stagnate this year.

The performance of services index rose 1.5 points to 39.3 from November, Commonwealth Bank of Australia and the Australian Industry Group said in Sydney today. A reading below 50 indicates the sector is contracting.

Increasing evidence that the economy may stall in 2009 may prompt Reserve Bank of Australia Governor Glenn Stevens to add to the most aggressive round of interest-rate cuts since 1992 when he next reviews the benchmark interest rate on Feb. 3. A separate report published last week showed manufacturing contracted for a seventh month in December.

“Australia’s services sector begins 2009 facing extremely tough business conditions,” said Heather Ridout, the industry group’s chief executive. “Of particular concern is the continued decline in new orders and supplier deliveries.”

Today’s report, which is based on a poll of about 200 companies, is similar to the U.S. non-manufacturing ISM index. It measures sales, new orders, deliveries, inventories and employment for companies such as banks, real estate agents, insurers, restaurants, transport companies and retailers to compile the overall performance of services index.

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

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New Zealand’s Consumer Spending Rises on Post-Christmas Sales

By Tracy Withers

Jan. 6 (Bloomberg) -- New Zealand’s consumer spending rose in December from a year earlier after a surge in transactions in the final week of the month as retailers slashed prices to attract customers.

The value of spending rose 2.6 percent last month to a record NZ$4.04 billion ($2.4 billion), Electronic Transaction Services Ltd., an Auckland-based company whose system handles 75 percent of all spending, said in an e-mailed statement today.

The sales increase was about one-third of the pace recorded in December 2007 as New Zealand slumped into its worst recession in 10 years and companies fired workers. Still, spending surged 10 percent in the final 10 days of last month as consumers chased bargains amid discounting by many stores from Dec. 26.

“While 2.6 percent is a fairly slow increase for December, New Zealanders still managed to spend more despite the current economic climate,” said Paul Whiston, head of sales at Electronic Transaction Services. Spending in the three weeks ended Dec. 21 was less than a year earlier.

Supermarkets and food retailers posted strong increases in sales while travel and tourism transactions slowed, the company said, without providing more details. The government publishes official figures for credit and debit card spending in December on Jan. 22 and retail-sales statistics for the month on Feb. 13.

Many retailers rely on spending in the Christmas period and early January to buoy profits. Warehouse Group Ltd., the nation’s biggest discount retailer, gets about 40 percent of operating earnings from its general merchandise stores in December and January.

Auckland-based Warehouse today said sales in the 10 weeks ended Jan. 4 fell 2.5 percent from a year earlier.

“The outlook remains uncertain as overall consumer spending is expected to remain weak,” Chief Executive Officer Ian Morrice said in a statement to the stock exchange.

To contact the reporter on this story: Tracy Withers in Wellington at twithers@bloomberg.net.

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U.K. Consumer Confidence Declined to Four-Year Low in December

By Svenja O’Donnell and Brian Swint

Jan. 6 (Bloomberg) -- U.K. consumer confidence fell to the lowest since at least 2004 in December as the recession deepened and unemployment rose, Nationwide Building Society said.

An index of sentiment fell four points from a month earlier to 47, the worst since the survey began four years ago, the mortgage lender said in a statement today. The reading, taken from a survey of 1,000 people between Nov. 17 and Dec. 14, compares with 84 points a year earlier.

The Bank of England will probably cut the benchmark interest rate further this week after reducing it in December to 2 percent, the lowest since 1951, economists say. Prime Minister Gordon Brown plans to unveil new measures to bolster the economy as it endures its first recession since 1991.

“Consumers’ confidence fell sharply in 2008, driven mainly by their sentiment about the economic and labor market situation,” said Fionnuala Earley, chief economist at Nationwide, in the statement. “As the U.K. enters recession it is likely to be some time before we see confidence returning.”

Nationwide’s index of consumers’ future expectations declined four points to 60 points in December, and a measure of sentiment on the current situation declined two points to 28. A gauge of willingness to spend rose to 82 from 66, as stores stepped up discounting to attract shoppers.

Britain’s economic prospects are worsening as shrinking growth lead companies to cut staff. The economy contracted 0.6 percent in the third quarter, and consumer spending dropped the most since 1995. Unemployment rose at the fastest pace since 1991 in November.

The U.K. central bank will probably cut the benchmark interest rate by a half point to 1.5 percent on Jan. 8, according to the median forecast of 57 economists in a Bloomberg News survey.

To contact the reporters on this story: Svenja O’Donnell in London at sodonnell@bloomberg.net; Brian Swint in London at bswint@bloomberg.net



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Philippine Inflation Rate Declines to 9-Month Low

By Francisco Alcuaz Jr.

Jan. 6 (Bloomberg) -- Philippine inflation eased to the slowest pace in nine months in December, prompting the central bank to say it will consider further interest-rate cuts.

Consumer prices rose 8 percent from a year earlier, the National Statistics Office said today in Manila. That compares with the 8.8 percent median estimate of nine economists in a Bloomberg News survey. Prices rose 9.9 percent in November.

Slowing inflation across Asia has allowed central banks to cut borrowing costs to spur growth as export demand falls. The Philippine central bank lowered its benchmark interest rate for the first time in 11 months in December to 5.5 percent.

“As inflation risks, particularly from food and fuel prices, continue to recede, we will carefully consider opportunities for monetary easing, mindful of potential tightening financial conditions,” Bangko Sentral ng Pilipinas Governor Amando Tetangco said in a mobile-phone text message today.

Indonesia yesterday said inflation slowed to 11.1 percent in December, a six-month low, and Thailand said consumer-price gains eased to 0.4 percent.

Cooling prices may also buoy consumer spending, said Jonathan Ravelas, market strategist at Banco de Oro Unibank Inc. in Manila. That could help support sales at SM Prime Holdings Inc. shopping malls, Jollibee Foods Corp. outlets and other retailers.

“The threat of inflation has been extinguished or taken a back seat,” Ravelas said. Slowing inflation “restores Philippine consumer power, which will help cushion the effects of the recession.”

Crude Oil

Inflation surged to a 16-year high of 12.5 percent in August after oil rose to a record $147.27 a barrel in July. Crude oil futures have fallen since then as the global recession damped demand, pushing prices down 54 percent last year, the first annual drop since 2001. The Philippines imports almost all its crude.

The cost of fuel, electricity and water fell 1.7 percent in December from a year earlier, today’s report showed. Prices of services, food and beverages rose at a slower pace.

To contact the reporter on this story: Francisco Alcuaz Jr. in Manila at falcuaz@bloomberg.net

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Shell Cuts Gas Spot Prices in India as Users Switch to Naphtha

By Dinakar Sethuraman

Jan. 6 (Bloomberg) -- Royal Dutch Shell Plc cut by almost 30 percent the price of natural gas to be sold in India this month because of competition from cheaper naphtha, a buyer said.

The price of the fuel converted from imported liquefied natural gas and sold to local power producers and fertilizer makers has slumped to about $12 per million British thermal units from $17 per million Btu in October, excluding transportation and taxes, said the buyer, who asked not to be identified because a confidentiality agreement. Naphtha, an alternative fuel, costs about $8 based on the equivalent calorific value, he said.

Slowing exports and domestic demand in India have forced companies including Tata Motors Ltd., the country’s biggest truck maker, and Hyundai Motor Co. to cut output, reducing demand for fuels as well as for petrochemicals and plastics made from naphtha. Prices of naphtha in Singapore tumbled 69 percent last year, outpacing crude oil’s 54 percent decline.

“Naphtha prices in India have gone so much below LNG that they are hurting demand for spot cargoes,” said Tony Regan, a Singapore-based independent consultant, and a former Shell executive. Some users can switch to naphtha, derived from crude oil, instead of natural gas.

The price of LNG sold in India has slumped from a record $23 per million Btu in September, the buyer said. No cargoes were imported in November and December, according to transmissions from ships captured by AISLive on Bloomberg.

Shell can’t divulge details of gas shipments and prices because of confidentiality agreements with customers, Deepak Mukarji, a New Delhi-based spokesman for the company’s India unit, said by e-mail on Jan. 2.

Shell operates a 3.5 million tons a year LNG import terminal at Hazira on India’s west coast. Total SA is a partner in the project.

To contact the reporter on this story: Dinakar Sethuraman in Singapore at dinakar@bloomberg.net.

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Russia Agrees to Gas Talks With Ukraine, Warns on Rising Debt

By Daryna Krasnolutska and Jones Hayden

Jan. 6 (Bloomberg) -- Russia and Ukraine agreed to restart talks on their dispute over natural gas prices and transit fees as deliveries were disrupted for a sixth day and OAO Gazprom warned Ukraine risks amassing a debt of “billions of dollars.”

Gazprom cut supplies of the fuel to Ukraine on Jan. 1, a day after talks broke down with Ukrainian utility NAK Naftogaz Ukrainy on contract renewals for 2009. A similar dispute interrupted supplies to Europe in 2006.

Russia supplies a quarter of Europe’s gas, and 80 percent of that is transported through Ukraine. Most supplies are continuing to reach European markets, and Russia said it would plug any shortfall with spot market purchases for which Ukraine would have to pay.

“It’s not in the interest of either side for it to drag on and cause a larger drop in supplies,” said Chris Weafer, chief strategist at UralSib Financial Corp., by phone from London. “The risk of a more substantial pressure drop elsewhere in the pipeline system increases if supplies are cut for more than 10 days.”

Gazprom Chief Executive Officer Alexei Miller told Russian Prime Minister Vladimir Putin in a meeting that Gazprom intends to reduce gas deliveries to the Ukraine border by 65.3 million cubic meters a day, equivalent to the amount it says Ukraine has taken out of the system. Ukraine denies siphoning the fuel, saying some is needed to keep pipelines operating.

“If this continues then the debt will soon come to billions of dollars,” Miller said. Gazprom says it is still owed $614 million for 2008 supplies, even after it receives a $1.5 billion payment, a claim Ukraine rejects.

Gazprom Demands

Gazprom raised its demands on Jan. 4 as Miller cited a possible price of $450 per 1,000 cubic meters for deliveries to Ukraine this month, reflecting the average price in countries bordering Russia’s neighbor. Ukraine paid $179.50 for its Russian gas last year and says $201 would be fair in 2009.

The European Union sought to help defuse the conflict, sending a delegation headed by Czech Industry Minister Martin Riman for talks with Ukrainian officials. They will meet with Ukrainian Energy Minister Yuriy Prodan, Oleh Dubina, head of state energy company NAK Naftogaz Ukrainy, and presidential advisers at 10 a.m. today, according to Bohdan Sokolovskyi, President Viktor Yushchenko’s energy aide.

“We have a mission in the region,” European Commission President Jose Manuel Barroso told reporters yesterday in Lisbon. “I hope the situation will be resolved.”

Ferran Tarradellas Espuny, a spokesman for the European Commission, the EU executive in Brussels, said the EU delegation would also meet Gazprom officials in an unspecified EU capital today.

Gas Diplomacy

Espuny told a press conference yesterday Russia’s cutoff of gas shipments to Ukraine was a “commercial dispute” that must be solved bilaterally.

“It has to be resolved by the two parties,” he said. “We’re putting pressure on to encourage both countries to go to the negotiating table, because it’s in our interest,” though the EU is “not acting as an intermediary.”

U.K. gas for immediate delivery gained 8.7 percent to 59.35 pence a therm at 4:44 p.m. London time yesterday, according to broker ICAP Plc. That’s equal to $8.66 a million British thermal units. A therm is 100,000 Btus. Gas for tomorrow rose 6.6 percent to 60.75 pence. U.K. gas for delivery next month rose 3.2 percent to 57 pence.

“I’m really surprised that the negotiations haven’t been settled,” said Alexander Rahr, director of Russian Programs at the German Council on Foreign Relations. “Both sides are being very stubborn.”

Romania, Bulgaria

Gazprom Deputy Chief Executive Officer Alexander Medvedev called in Paris yesterday for Ukraine to take part in talks, describing its behavior as “irresponsible.”

Romania and Bulgaria said gas supplies from Russia have dropped as several European countries tapped reserves to meet shortfalls.

Hungary, one of the countries most hurt in the 2006 dispute, and the Czech Republic also said supplies were down, while Poland and Slovakia noticed lower shipments via Ukraine. France, Germany and Austria said deliveries were as contracted. Officials in Italy, also affected in 2006, couldn’t immediately be reached for a comment.

“Import levels are down 30 percent to about 7 million cubic meters per day,” Ioan Rusu, general manager of Romanian state-owned pipeline operator Transgaz SA, said in a phone interview yesterday.

Storage Reserves

Deliveries also fell in Bulgaria, which pumps some 17.8 billion cubic meters of Russian gas onwards to Turkey, Greece and Macedonia annually. Supplies to Bulgaria fell by some 15 percent from Jan. 3, Marusia Dimova, a spokeswoman for Bulgargaz AD, the state-run gas distributor, said by phone in Sofia.

“We’re compensating the gap in supplies with gas from the storage facility at Chiren,” she said. “If supplies remain at this level, the Chiren storage will last for a little more than a month.”

Hungary may cut the amount of natural gas it transits to Serbia and Bosnia after Ukraine proposed to reduce supplies by 8 million cubic meters, Energy Minister Csaba Molnar said in Budapest yesterday. The central European country was scheduled to get 38 million cubic meters yesterday, 11 million of which was to go to Serbia and Bosnia.

Polskie Gornictwo Naftowe i Gazownictwo SA, Poland’s largest gas distributor, is getting gas in line with contracts. Supplies via Ukraine are down 11 percent and Gazprom is compensating for this drop by increasing shipments via Belarus, spokeswoman Joanna Zakrzewska said by phone.

Deliveries of Russian gas to Germany are unaffected.

To contact the reporters on this story: Daryna Krasnolutska in Kiev on dkrasnolutsk@bloomberg.net: Jones Hayden in Brussels on jhayden1@bloomberg.net

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Australia, N.Z. Dollars Rise as Commodities, Stocks Advance

By Ron Harui

Jan. 6 (Bloomberg) -- The Australian dollar rose to the highest in more than 2 1/2 months against the greenback and New Zealand’s currency gained as prices increased for commodities that make up more than half the nations’ exports.

The currencies gained for a fourth day versus the yen as stocks rose amid optimism U.S. President-elect Barack Obama’s fiscal stimulus will help the world’s largest economy recover from recession, reviving investors’ appetite for higher-yielding assets. The Australian dollar touched an eight-week high against the yen as the yield gap between two-year Australian and Japanese bonds widened to the most in more than a month.

“There has been an improvement in the risk environment as equity markets had a positive start to the new year,” said Imre Speizer, a market strategist in Wellington with Westpac Banking Corp. “U.S. data, while still poor, hasn’t been as bad as the market expected and commodities also recovered. Obama’s planned tax cuts also may bolster consumer and business sentiment.”

Australia’s dollar climbed to 71.14 U.S. cents at 12:40 p.m. in Sydney, from 71.02 cents in late Asian trading yesterday. It touched 72.05 cents, the highest since Oct. 15. It advanced to 66.26 yen from 66.18 yen. The currency reached 67.26 yen, the strongest since Nov. 11.

New Zealand’s dollar rose to 58.72 U.S. cents from 58.43 cents in Asia yesterday. It touched 59.18 cents, matching yesterday’s two-week high. The currency gained to 54.70 yen from 54.44 yen. It reached 55.22 yen, the most since Nov. 14.

The Reuters/Jefferies CRB Index of 19 raw materials climbed to 237.33 yesterday, its strongest since Dec. 1, as crude oil rose to a five-week high amid speculation the conflict in the Gaza Strip may disrupt Middle-East oil supplies and on signs that OPEC production cuts are being implemented. The MSCI Asia-Pacific Index of regional shares advanced 0.6 percent.

Commodities

Commodities including coal, iron ore, gold and oil account for 60 percent of Australia’s export revenue. New Zealand relies on raw materials including milk and timber for 70 percent of its overseas shipments.

The Australian dollar probably will trade between 71 and 72 U.S. cents and may break above 72 cents, Speizer said. The New Zealand currency is unlikely to rise above 59.20 U.S. cents, where it is encountering strong resistance. It may trade between that level and 58.60 cents, he said.

The yield advantage of two-year Australian government bonds over similar-maturity Japanese debt reached 2.60 percentage points this week, the most since Nov. 27.

Australia’s and New Zealand’s currencies gained for a second day versus the greenback after Democratic aides said Obama is asking that tax cuts make up 40 percent of a stimulus package worth about $775 billion.

‘Potential to Surprise’

The Chicago Board Options Exchange Volatility, or VIX, slipped 0.3 percent to 39.08, the lowest closing level since Sept. 26, indicating increased risk appetite. It surged to 89.53 on Oct. 24, an intra-day record in its 18-year history. The volatility index is known as Wall Street’s “fear gauge” because it almost always rises when stocks drop.

The Australian dollar, which last year posted its worst annual drop on record, may resume its decline before a U.S. report this week that may show the nation’s economy lost more jobs in 2008 than in any year since 1945, BNP Paribas SA said.

“The payrolls report has potential to surprise on the downside, implying that we could see another round of risk aversion,” wrote BNP’s analysts led by Hans-Guenter Redeker, global head of foreign-exchange strategy in London, in a research note yesterday. “We expect the Australian dollar’s upside to be limited.”

BNP Paribas forecasts Australia’s dollar will weaken to 52 U.S. cents by the end of March and will decline further to 47 cents by the end of June, according to the note.

Carry Trade

Payrolls fell 500,000 in December, bringing last year’s decline to 2.4 million, the most since 1945, according to the median estimate of economists surveyed by Bloomberg News ahead of Labor Department figures due Jan. 9.

Benchmark interest rates are 5 percent in New Zealand and 4.25 percent in Australia, compared with 0.1 percent in Japan and as low as zero in the U.S., attracting investors through so- called carry trades.

In a carry trade, investors get funds in a country with low borrowing costs and invest in one with higher interest rates, earning the spread between the two. The risk is that currency market moves erase those profits.

Australian government debt advanced. The yield on the two- year bond fell one basis point, or 0.01 percentage point, to 2.98 percent, according to data compiled by Bloomberg. The price of the 5.25 percent security due August 2010 gained 0.009, or A$0.09 per A$1,000 face amount, to 103.524.

New Zealand’s two-year swap rate, a fixed payment made to receive floating rates, climbed to 4.37 percent from 4.36 percent yesterday.

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

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Euro Falls Against Yen as EU Inflation May Allow for Rate Cuts

By Stanley White

Jan. 6 (Bloomberg) -- The euro fell against the yen and traded near a three-week low versus the dollar before European Union data that may show inflation slowed in December, giving the European Central Bank more room to lower interest rates.

The greenback advanced against the South Korean won and the Malaysian ringgit on optimism U.S. President-elect Barack Obama’s stimulus package may total as much as $1.3 trillion. The yen rose against the dollar on speculation Japanese investors took advantage of its decline yesterday to buy the currency on the cheap to repatriate overseas earnings.

“The market is leaning toward euro selling,” said Osao Iizuka, head of foreign exchange trading at Sumitomo Trust & Banking Co. in Tokyo. “There are growing signs the ECB will cut rates. Speculation Obama’s stimulus package will be large enough to help the U.S. economy is also supportive for the dollar.”

The euro fell to 127.11 yen at 9:20 a.m. in Tokyo from 127.31 yen late yesterday in New York. The euro traded at $1.3614 from $1.3635, when it touched $1.3547, the lowest level since Dec. 15. The dollar was at 93.10 yen from 93.44 yen. It rose yesterday to 93.60 yen, the highest level since Dec. 8. The euro may decline to $1.3550 today, Iizuka said.

The dollar rose to 1,320.95 South Korean won from 1,313.75 and gained to 3.5083 Malaysian ringgit from 3.4975. Against the Singapore dollar, the U.S. currency rose to S$1.4732 from S$1.4706.

ECB Policy

Inflation in the euro area probably slowed to 1.8 percent last month, according to the median forecast of 28 economists surveyed by Bloomberg News. The report from the European Union’s statistics office in Luxembourg is due today. The rate fell to 2.1 percent in November from 3.2 percent the prior month, the biggest reduction since at least 1991.

“Poor economic fundamentals in euroland warrant further rate cuts from the ECB,” said Paresh Upadhyaya, who helps manage $50 billion in currency assets as a senior vice president at Putnam Investments LLC in Boston. “The interest-rate differential is moving in favor of the dollar again.” The euro may fall to $1.30 in three months, said Upadhyaya.

The ECB cut interest rates by 1.75 percentage points since early October to 2.5 percent as the region entered a recession. The ECB’s next policy decision is due on Jan. 15.

Obama’s Stimulus

Obama “has indicated that there’s at least 20 economists that he’s talked with, and all but one of those believe it should be from $800 billion to $1.2 trillion or $1.3 trillion,” Senate Majority Leader Harry Reid said after meeting with the president- elect on Capitol Hill. Obama will take office on Jan. 20.

“I am very bullish on the dollar throughout 2009,” said Matt Esteve, foreign-exchange trader at currency-trading firm Tempus Consulting Inc. in Washington, in an interview on Bloomberg Television. “I think it’s because the U.S. economy is best set for recovery in 2009.”

The dollar will advance to $1.10 per euro and 110 yen by year-end, according to Esteve.

The yen advanced to 66.33 per Australian dollar from 66.97 late yesterday in New York. The yen pared yesterday’s 2.5 percent decline against the currency on speculation Japanese investors and exporters repatriated overseas earnings.

“When the yen comes back to Tokyo as cheaply as it did today, some Japanese investors can’t pass up the chance to buy it,” said Takeshi Tokita, vice president of foreign-exchange sales in Tokyo at Mizuho Corporate Bank, a unit of Japan’s second-largest publicly traded lender.

The yen may move between 92.60 and 93.40 versus the dollar today, he said.

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

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Malaysia’s Ringgit Drops on Economic Outlook, Mideast Tensions

By David Yong

Jan. 6 (Bloomberg) -- Malaysia’s ringgit fell for a third day, the longest stretch since the start of December, on concern deepening recessions in the world’s major economies will sap demand for regional assets.

The ringgit traded near the lowest level against the dollar in three weeks on speculation the escalating war between Israel and Hamas, and rising oil prices, will increase demand for the U.S. currency. Economists estimate a report from Malaysia’s trade ministry tomorrow will show exports slumped in November by the most since February 2002.

“The market reflects demand for safe-haven assets due to the prolonged crisis, and to a smaller extent, the weak economic data,” said Tan Voon Ching, a currency trader at OSK Investment Bank Bhd. in Kuala Lumpur.

The ringgit weakened 0.3 percent to 3.5075 per U.S. dollar as of 9:40 a.m. in Kuala Lumpur, according to data compiled by Bloomberg. It earlier reached 3.5138, the lowest since Dec. 18.

Exports declined 5.7 percent in November from a year earlier, according to the median estimate in a Bloomberg News survey of economists. They slipped 2.6 percent in October, the first contraction since July 2007.

Foreign investors reduced their holdings of ringgit- denominated bills and bonds for a sixth straight month in October from a record amount in April, according to the latest Bank Negara Malaysia statistics issued in December.

“Data out of Asia highlight the trend of falling inflation, slowing growth and deteriorating external accounts, which we view as negative for regional currencies,” Win Thin, a senior currency strategist in New York at Brown Brothers Harriman & Co., said in a research note. “Policy makers may not want to see significantly stronger currencies for the time being.”

To contact the reporter on this story: David Yong in Singapore at dyong@bloomberg.net.

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Korea Won Falls as Importers Pay Overseas Bills; Bonds Advance

By Kim Kyoungwha

Jan. 6 (Bloomberg) -- South Korea’s won weakened against the U.S. dollar on speculation importers purchased foreign exchange to pay bills. Bonds advanced.

The Korean currency, Asia’s worst performer last year, is down 4.3 percent since the start of 2009, even as global funds bought more local shares than they sold for a fifth day, the longest stretch since April 2007, according to Korea Exchange.

The won fell 0.3 percent to 1,317.35 per dollar as of 9:58 a.m. in Seoul, according to Seoul Money Brokerage Services Ltd. The Kospi stock index rose 1.9 percent to 1,196.06, a fourth day of gains.

“Demand for dollars from importers is rising,” said Jay Won, a currency dealer with Korea Exchange Bank in Seoul. “Still, the market became more stable than last year as the won is largely seen moving in a range between 1,280 and 1,350 for the time being.”

Bonds advanced on speculation the Bank of Korea will lower its benchmark interest rate from a record-low 3 percent this week to spur spending at home as a global recession hurts exports.

Bank of Korea Governor Lee Seong Tae and his board members will cut the seven-day repo rate by 50 basis points to 2.5 percent, a Bloomberg survey of economists showed. The central bank meets on Jan. 9 to review rates. The economy probably shrank last quarter from the third quarter, the first contraction since early 2003, Lee said last week.

The yield on the benchmark bond due September 2013 fell 3 basis points to 3.7 percent, according to the Korea Securities Dealers Association. The price of the security rose 0.15, or 15 won per 10,000 won face amount, to 110.55. A basis point is 0.01 percentage point.

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

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Oil Is Little Changed After Rising on Gaza Attacks, OPEC Cuts

By Christian Schmollinger

Jan. 6 (Bloomberg) -- Crude oil traded little changed near a five-week high on speculation that OPEC is implementing a 9 percent production cut and concerns an expansion of the Gaza Strip conflict may disrupt Middle East supplies.

The Organization of Petroleum Exporting Countries is likely to make all the output cuts promised at its last meeting, causing global stockpiles to fall this quarter, an official from a Persian Gulf member of the group said. Oil gained yesterday as Israeli warplanes bombarded Palestinian targets and thousands of soldiers moved into Gaza.

“The cuts that OPEC has made are fairly material and as we go forward the impact will be increasingly supportive to the oil price,” said David Moore, a commodity strategist at Commonwealth Bank of Australia Ltd. in Sydney. “I’m not sure there are direct implications to oil supply but people are concerned about the uncertainty of where this Middle East conflict will end up.”

Oil for February delivery was at $48.54 a barrel, down 27 cents, in electronic trading on the New York Mercantile Exchange at 9:31 a.m. Singapore time. Futures yesterday rose $2.47, or 5.3 percent, to $48.81 a barrel, the highest settlement since Dec. 1. Prices have rallied 38 percent since Dec. 24.

Full implementation of OPEC’s 4.2 million barrel-a-day reduction in supplies will send inventories below their five- year average, said the official with direct knowledge of OPEC’s deliberations, declining to be identified by name because he isn’t authorized to speak publicly. It’s unlikely the group will convene before its scheduled meeting on March 15, he said.

The cutback is from OPEC’s September production levels and includes a reduction that took effect Nov. 1. The group agreed to a record cut of 2.46 million barrels a day at a meeting in Oran, Algeria, on Dec. 17. OPEC produces more than 40 percent of the world’s oil.

Abu Dhabi Cuts

Abu Dhabi National Oil Co., the United Arab Emirates state- owned producer, said on Dec. 26 that it would cut its shipments of crude sold to Asian under long-term contracts by up to 15 percent for some grades in January and February. The country was OPEC’s fourth-largest producer in November.

Brent crude oil for February settlement was at $49.30 a barrel, down 32 cents, on London’s ICE Futures Europe exchange at 9 a.m. Singapore time. The contract yesterday added $2.71, or 5.8 percent, to $49.62 a barrel.

To contact the reporter on this story: Christian Schmollinger in Singapore at christian.s@bloomberg.net.

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Malaysia Stocks: Sime, Top Glove, WCT, YTL Power International

By Ian C. Sayson

Jan. 6 (Bloomberg) -- Malaysia’s Kuala Lumpur Composite Index fell 7.45, or 0.8 percent, to 913.21 as of 9:22 a.m. local time, after climbing yesterday to its highest close since Oct. 15. Seven stocks fell for each that rose among the 100 components of the measure.

Sime Darby Bhd. (SIME MK), a property and palm-oil company, had its first loss in five sessions, sinking 15 sen, or 2.6 percent, to 5.55 ringgit. The company said it won government approval to build a low-cost carrier terminal in the country with AirAsia Bhd. (AIRA MK), Southeast Asia’s largest budget airline. AirAsia added 0.5 sen, or 0.6 percent, to 91 sen, heading for a three-day, 5.2 percent gain.

Top Glove Corp. (TOPG MK), the world’s largest rubber-glove maker, gained for the third day, adding 2 sen, or 0.5 percent, to 3.82 ringgit, set for its highest close since Nov. 5. The company is due to release financial results today for the fiscal first quarter ended Nov. 30. It said in October that profit in the year ending August 2009 will probably increase between 15 percent and 20 percent.

WCT Bhd. (WCT MK), an engineering company, declined 54 sen, or 30 percent, to 1.29 ringgit, set for its biggest loss since February 1995. WCT’s $13 billion contract to build a horseracing track in Dubai was canceled by the company that awarded the order, Meydan LLC, Reuters reported, citing a missed deadline.

YTL Power International Bhd. (YTLP MK), a power generator, declined 5 sen, or 2.5 percent, to 1.93 ringgit, set for its biggest loss since Dec. 3. The company proposed spending 4 billion ringgit ($1.1 billion) on a new plant to sell electricity to state-owned utility Tenaga Nasional Bhd., the Business Times reported, citing an unidentified person.

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

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Japan Stocks Rise for Sixth Day on Weaker Yen; Canon Advances

By Masaki Kondo

Jan. 6 (Bloomberg) -- Japanese stock rose, leading the Nikkei 225 Stock Average to its longest winning streak in 18 months, as the weakening yen improved the earnings outlook for automakers and electronics manufacturers.

Canon Inc., which gets a third of its sales from the Americas, rose 2.8 percent after the Japanese currency sank to a one-month low versus the dollar. Nintendo Co., the world’s biggest maker of handheld game players, rallied 2 percent after Nomura Securities Co. estimated its share price will rise 24 percent to 45,000 yen in the next 12 months. Tokyo Electric Power Co. dropped 0.7 percent after oil extended its gain to a third day.

The Nikkei 225 Stock Average climbed 59.28, or 0.7 percent, to 9,102.40 as of 9:50 a.m. in Tokyo, poised for the longest winning streak since July 2007. The broader Topix index rose 1.21, or 0.1 percent, to 877.12, with almost the same number of stocks rising and falling.

The yen’s retreat may give breathing room to Japanese companies that depend on overseas sales, as the global economic slump cuts demand. Dimming earnings prospects in 2008 prompted investors to sell off automakers and electronics manufacturers, causing Toyota and Sony Corp. to lose more than half their value last year.

The yen depreciated against the dollar to as much as 93.60 today, the weakest level since Dec. 8, from 92.03 at the 11 a.m. close of stock trading in Tokyo yesterday. The local currency strengthened to as much as 93.05 today.

Canon, the world’s biggest digital-camera maker, added 2.8 percent to 2,910 yen, while Sony climbed 2.3 percent to 2,015 yen. Panasonic Corp., the world’s largest maker of consumer electronics, rose 1.4 percent to 1,157 yen. Electronics makers were the biggest contributors to the Topix’s gain.

Nintendo, Utilities

A 1 yen change against the dollar alters Canon’s annual operating profit by 2.6 billion yen ($28 million), the company said in October. A weaker yen increases the value of overseas sales when revenue is repatriated.

Nintendo, the world’s biggest maker of handheld game players, rallied 2 percent to 36,200 yen. The game maker will remain among the nation’s top profit gainers although a stronger yen hurts earnings, according to Nomura.

Tokyo Electric, Asia’s biggest utility, sank 0.7 percent to 2,925 yen, while Kansai Electric Power Co. fell 1 percent to 2,535 yen. Power generators weighed the most on the Topix’s gain.

Crude oil for February delivery jumped 5.3 percent yesterday to $48.81 a barrel, the highest since Dec. 1. Israel’s battle against Hamas fighters in the Gaza Strip boosted concern oil supply in the Middle East, the source of one-third of the world’s supply, will be disrupted. Oil fell as much as 1 percent today.

Chip Prices Rise

A $1 change in a barrel of crude alters Tokyo Electric’s annual fuel costs by 18 billion yen, the company said in October.

Elpida Memory Inc., Japan’s biggest memory-chip maker, jumped 4.5 percent to 625 yen, while NEC Electronics Corp. added 3.6 percent to 854 yen. Prices of the benchmark dynamic random access memory chips rose 5.5 percent on Jan. 5, according to Dramexchange Technolog Inc., Asia’s biggest spot market for chips.

Nikkei futures expiring in March added 0.4 percent to 9,110 in Osaka and gained 0.3 percent to 9,105 in Singapore.

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

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Asian Stocks Extend Winning Streak on Weaker Yen, Oil Rally

By Patrick Rial and Shani Raja

Jan. 6 (Bloomberg) -- Asian stocks climbed, extending the regional benchmark index’s winning streak to nine days, as the yen weakened, crude oil rallied, and the Federal Reserve began purchasing mortgage securities to ease credit conditions.

Canon Inc., the world’s biggest maker of digital cameras, jumped 3.9 percent as the nation’s currency traded near a one- month low. BHP Billiton Ltd., the world’s No. 1 mining company, added 1 percent in Sydney after oil extended its gain to a third day. National Australia Bank Ltd., the country’s largest by assets, rose 3 percent as the U.S. Fed’s move helped narrow spreads between Treasuries and Fannie Mae mortgage bonds.

The MSCI Asia Pacific Index gained 0.7 percent to 91.78 as of 10:39 a.m. in Tokyo, set for the highest since Nov. 5 and longest winning stretch since August 2004. The benchmark posted a record 43 percent decline in 2008 as turmoil in financial markets dragged the global economy into a recession.

“We’re starting to see that it’s not going to be the end of the world,” said Pedro Marcal, a San Diego-based portfolio manager of the Allianz NACM Pacific Rim Fund at Nicholas- Applegate Capital Management, which manages about $8 billion. “You need a financial system for capitalism to work.”

Japan’s Nikkei 225 Stock Average rose 1.2 percent to 9,151.36. Benchmark indexes throughout the region climbed, except in Malaysia and Singapore.

U.S. stocks slipped yesterday, with the Standard & Poor’s 500 Index losing 0.5 percent before Senate Majority Leader Harry Reid said President-elect Barack Obama is reviewing stimulus plans worth as much as $1.3 trillion. An Obama aide today said the president-elect favors a plan worth about $775 billion. Futures on the S&P fell 0.3 percent today.

Yen, Oil

Canon, which gets almost 80 percent of its sales overseas, climbed 3.9 percent to 2,940. Sharp Corp., Japan’s biggest maker of flat-screen televisions, jumped rose 7.2 percent to 747 yen.

The yen depreciated against the dollar to as much as 93.60 today, the weakest level since Dec. 8, from 92.03 at the 11 a.m. close of stock trading in Tokyo yesterday. A weaker yen increases the value of overseas sales when revenue is repatriated.

Dimming earnings prospects in 2008 prompted investors to sell off automakers and electronics manufacturers, causing Toyota Motor Corp. and Sony Corp. to lose more than half their value last year. Toyota and rival Honda Motor Co. said today December U.S. sales plummeted by more than a third. Shares of both companies advanced.

Oil Rally

“The weaker yen and U.S. economic stimulus policies may provide a comeback opportunity for shares that plunged last year,” Mamoru Shimode, chief equity strategist at Deutsche Bank AG, said in an interview with Bloomberg Television.

Nippon Electric Glass Co. the world’s third-biggest supplier of glass for liquid-crystal displays, soared by its 80-yen daily limit, or 16 percent, to 579 yen. The Nikkei newspaper said the company will spend up to 3 billion yen ($32.2 million) to increase television-glass production facilities. Toshiba Corp. rose 5.9 percent to 396 after its Westinghouse Electric nuclear power unit signed contracts for plants worth $7.65 billion.

BHP rose 1 percent to A$31.93. Paladin Energy Ltd., which mines for uranium, soared 12 percent to A$2.96. Boart Longyear Ltd., a provider of drilling services to miners including BHP, jumped 7 percent to 23 cents in Sydney.

Crude oil for February delivery gained 5.3 percent yesterday to $48.81 a barrel, the highest settlement since Dec. 1. Israel’s battle against Hamas fighters in the Gaza Strip boosted concern oil supply in the Middle East, the source of one-third of the world’s supply, will be disrupted.

National Australia Bank gained 3 percent to A$20.83. Mitsubishi UFJ Financial Group Inc., Japan’s biggest lender by value, advanced 0.7 percent to 574 yen. KB Financial Group Inc., the owner of South Korea’s biggest bank, climbed 3 percent to 39,950 won.

Leighton, NGK

The Federal Reserve Bank of New York started buying mortgage-backed securities yesterday as part of a $500 billion program to support the U.S. housing market, without disclosing the amount purchased. The difference between yields on Washington-based Fannie Mae’s current-coupon 30-year fixed-rate mortgage bonds and 10-year Treasuries fell 21 basis points to 157 basis points, indicating credit markets are easing.

Leighton Holdings Ltd., Australia’s largest engineering and construction company, plunged 8.8 percent to A$25.84 after saying profit plunged 60 percent in the first half as the global financial crisis forced it to write down the value of its listed investments.

NGK Insulators Ltd., the world’s only producer of sodium- sulfur batteries, jumped 8.5 percent to 1,146 yen after a 10 billion yen sale of the batteries to the United Arab Emirates.

Semiconductor producers climbed after prices of the benchmark dynamic random access memory chips rose 5.5 percent yesterday, according to Dramexchange Technology Inc., Asia’s biggest spot market for chips. Hynix Semiconductor Inc., the world’s second-largest computer-memory maker, added 5.4 percent, while Elpida Memory Inc., Japan’s biggest, rose 4 percent.

To contact the reporters for this story: Patrick Rial in Tokyo at prial@bloomberg.net; Shani Raja in Sydney at sraja4@bloomberg.net.

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