Borse Dubai May Refinance $2.5 Billion Loan as Credit Eases

By Haris Anwar

Jan. 8 (Bloomberg) -- Borse Dubai Ltd. may be the emirate’s first state-owned company to tap banks to refinance a multibillion-dollar loan since September, a sign interest rates have returned to levels companies are willing to accept.

Borse Dubai, the owner of Nasdaq Dubai, is seeking a $2.5 billion loan this month, according to bankers close to the talks who declined to be identified because the negotiations are private. It needs to replace a one-year syndicated loan taken out last year to pay for the purchase of Swedish exchange OMX AB.

“We’re very optimistic,” said Huda Buhumaid, Borse Dubai’s spokeswoman in Dubai. “But we don’t want to disclose the nature of our negotiations with banks at this point.”

Dubai’s biggest companies have refused to refinance their maturing loans in the past two months as lenders raised margins after the global credit crunch reduced appetite for lending in a region hit by falling real-estate prices. Investment Corp. of Dubai borrowed $6 billion in September, marking the last regional deal over $1 billion.

The largest state-owned companies in the United Arab Emirates -- of which Dubai is one of seven sheikhdoms -- have $20 billion of debt due this year, according to a Merrill Lynch & Co. report published in October. Dubai borrowed to build the world’s tallest tower, create palm tree-shaped islands and buy stakes in banks worldwide to become a financial and tourist hub as its oil resources dwindle.

Closing the Deal

Borse Dubai raised $4.2 billion last year to fund its OMX takeover and borrowed 796 million pounds ($1.2 billion) to buy a stake in London Stock Exchange Group Ltd.

“The market has been trying to open up,” Luis Costa, an emerging-markets debt strategist at Commerzbank AG in London, said in a telephone interview. “The market is now much more benign to sovereign credits, and to companies linked to sovereigns. I wouldn’t be surprised to see some deals coming to the market in the next few weeks.”

Borse Dubai will likely close the deal at between 7.5 percent and 8 percent if it seeks a two-year loan and between 8.5 percent and 9 percent for a three-year refinancing, according to Costa. His estimates are factoring in the current pricing of credit- default swaps based on Dubai’s debt. The original one-year loan paid more than 1 percentage point over the London interbank offered rate.

Dubai World

Banks had been toughening terms for all borrowers following more than $1 trillion in writedowns and losses worldwide. Since November, at least three state-owned companies repaid their loans using their own resources to avoid setting higher price benchmarks. Dubai World, an investment company owned by the Dubai government, repaid $1.2 billion loan last month, saying the cost of refinancing was “uncompetitive.”

Dubai Holding Commercial Operations Group LLC, a company owned by Dubai ruler Sheikh Mohammed bin Rashid al-Maktoum, said Nov. 26 it repaid $650 million in maturing Eurobonds and bank loans from its internal cash flow. DIFC Investments LLC, a unit of state-owned Dubai International Financial Centre, said Dec. 2 it repaid a $500 million loan due to mature Dec. 5.

HSBC Holdings Plc is leading a group of lenders to arrange the syndication for Borse Dubai, according to the bankers. HSBC spokesman Tim Harrison in Dubai declined to comment.

The perceived risk of Dubai companies as measured by default swaps is falling amid speculation that the emirate has secured financial backing from the federal government of Abu Dhabi.

Credit-default swap contracts covering the debt of DP World Ltd., the world’s fourth-biggest port operator, were last quoted at 760 basis points yesterday, according to CMA Datavision prices. That compares with 900 basis points in October. The decrease signals an improvement in the perception of credit quality, while a basis point on a swap contract protecting $10 million of debt for five years is equivalent to $1,000 a year.

“What investors are trying to assess now is to which extent the state will be there to help these enterprises,” said Costa. “Some of the good Dubai names will be able tap the loan market if we continue to see the positive trend here.”

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

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U.K. Stocks Update: FTSE 100 Falls 27.94 to 4,479.57

By Daniel Hauck

Jan. 8 (Bloomberg) -- The U.K.'s benchmark stock index, the FTSE 100, fell 0.62 percent at 8:05 a.m.

The index of 102 stocks traded on the London Stock Exchange fell 27.94 to 4,479.57. Among the stocks in the index, 28 rose, 70 fell and 4 were unchanged.

Declines in the FTSE 100 were led by Vodafone Group Plc (Vod Ln), Bhp Billiton Plc (Blt Ln) and Rio Tinto Plc (Rio Ln). About 15.74 million shares traded in the FTSE 100.

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Stocks in Europe, Asia Decline on Earnings Concern; BHP Drops

By Adam Haigh

Jan. 8 (Bloomberg) -- Shares in Europe and Asia fell on speculation earnings will deteriorate as the global economic slump reduces demand for commodities. U.S. index futures drifted between gains and losses.

BHP Billiton Ltd. and Rio Tinto Group dropped at least 2 percent as copper retreated in London. Lenovo Group Ltd. had its steepest decline in a decade after the fourth-biggest personal computer maker predicted a quarterly loss. Infineon Technologies AG, Europe’s second-largest chipmaker, slumped 9.2 percent.

The MSCI World Index fell 0.8 percent to 932.13 at 9:44 a.m. in London. Weaker-than-estimated sales at Intel Corp. and Lenovo’s forecast this week disappointed investors as Citigroup Inc. estimated the downturn in earnings is only a quarter of the way into a 50 percent slide from the peak.

“We call it the hard slog,” said Kevin Lecocq, chief investment officer at Barclays Wealth, which manages about $215 billion in assets. “You are going to see horrible numbers until some of the fiscal stimuli start to impact the real economy, which will probably come in the end of 2009 and into 2010,” he told Bloomberg Television.

The MSCI World has tumbled 41 percent since the start of last year as more than $1 trillion in losses at financial companies eroded profits and the U.S., Europe and Japan fell into the first simultaneous recessions since World War II.

Europe’s Dow Jones Stoxx 600 Index declined for a second day, losing 0.6 percent. The measure had posted its best ever start to a year on speculation efforts by governments and central banks will revive the global economy.

U.K. Interest Rates

The global slowdown may prompt the Bank of England to reduce its key interest rate today to an all-time low of 1.5 percent from 2 percent, according to economists surveyed by Bloomberg. The European Central Bank has reduced its benchmark rate by 1.75 percentage points to 2.5 percent since October.

The MSCI Asia Pacific Index dropped 3.2 percent, the biggest decline since Dec. 12, as Cnooc Ltd. and Macquarie Group Ltd. retreated. Futures on the Standard & Poor’s 500 Index were little changed before a report that may show the number of Americans filing for initial jobless claims rose last week.

Global equities “need to get more of the bad news out of the way before attempting a meaningful recovery,” Citigroup equity strategists led by Robert Buckland wrote in a note to clients dated yesterday. ING Wholesale Banking said stocks in western Europe will make little headway in 2009 and may test fresh lows in the first half of the year.

Profit Decline

The western European companies tracked by Bloomberg that announced results since the Stoxx 600 began its rebound on Nov. 21 posted an average 75 percent decline in profit, with 92 percent missing analysts’ expectations.

BHP, the world’s largest mining company, lost 2.3 percent to 1,303 pence as Rio Tinto, the third-biggest, slid 4.2 percent to 1,736 pence. Copper fell as much as 2.3 percent in London.

Earnings at basic-resource companies in the Stoxx 600 will drop 18 percent this year, according to analysts’ estimates compiled by Bloomberg. That’s the second-steepest decline among 10 industry groups after energy companies, the data show.

Lenovo sank 26 percent to HK$1.91. The company said it expects to post a “material loss” in the quarter ended Dec. 31 and will eliminate about 2,500 jobs, leading to savings of about $300 million in the year ending March 2010.

The outlook from the maker of Thinkpad laptops underscores the challenge facing technology companies after Intel yesterday said fourth-quarter revenue dropped 23 percent and Dell Inc. replaced top executives to revive demand.

Infineon, ASML

Infineon tumbled 9.2 percent to 1.08 euros. ASML Holding NV, Europe’s largest maker of semiconductor equipment, slipped 1.8 percent to 12.815 euros.

Hays Plc dropped 4.6 percent to 73 pence. Britain’s largest recruitment company said net fees fell 10 percent in the quarter ended Dec. 31 as companies stopped hiring full-time staff and the pace of layoffs increased.

In Asia, Cnooc lost 6.7 percent to HK$7.37 after crude sank the most in more than seven years yesterday, plunging 12 percent to $42.63 a barrel in New York on demand concern. Oil added 0.7 percent today.

Macquarie dropped 3.7 percent to A$32.50 as Australia’s biggest securities firm said a “challenging” market is hurting profitability and announced a A$1.5 billion ($1.07 billion) sale of margin loans to a regional lender.

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

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Australian Building Industry Shrank for 10th Month in December

By Jacob Greber

Jan. 8 (Bloomberg) -- Australia’s construction industry shrank in December for a 10th month as demand for new houses waned amid a slump in consumer confidence and banks cut lending.

An index measuring construction fell 1.1 points to 30.9 from November, according to a report by the Australian Industry Group and Housing Industry Association released in Sydney today. A reading below 50 shows construction contracted.

Signs the property market is contracting were among reasons central bank Governor Glenn Stevens cut the benchmark interest rate last year by three basis points to 4.25 percent, the biggest reduction since a recession in 1991. House prices dropped in the third quarter by the most since 1978.

“We are continuing to see conditions deteriorate,” said Tony Pensabene, an associate director of economics at the Australian Industry Group.

Builders “are being hit hard by the lack of credit availability and a reluctance by clients to commit to new projects,” Pensabene added. “The current weakness is likely to persist” this year.

A gauge of commercial building slumped to 27.5 points from 45.9 in November, today’s report showed. Engineering fell to 26.1 points from 38.2, while a measure of home construction rose to 23.4 from 20.3.

Today’s survey is based on responses from about 120 construction companies on sales, new orders, deliveries, employment and input costs.

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

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Australia’s Trade Surplus Narrows as Exports Decline

By Jacob Greber

Jan. 8 (Bloomberg) -- Australia’s trade surplus narrowed in November by more than economists forecast as iron ore and coal exports fell and imports gained.

The surplus narrowed to A$1.45 billion ($1 billion) from A$2.96 billion in October, the Bureau of Statistics said in Sydney today. The median estimate of 14 economists surveyed by Bloomberg was for A$2.1 billion.

The weakening trade balance reinforces central bank Governor Glenn Stevens’s view that Australia’s economy will be hurt by waning global growth. Stevens and his board cut the benchmark interest rate last year by three percentage points to a six-year low of 4.25 percent in the most aggressive monetary policy easing since a recession in 1991.

“The trade balance may narrow in coming months as global economic growth slows,” said Alex Joiner, an economist at Australia & New Zealand Banking Group Ltd. in Melbourne.

Exports fell 4 percent to A$26.9 billion in November, today’s report showed. Iron ore and mineral shipments dropped 13 percent and coal declined 2 percent.

The Australian dollar traded at 70.85 U.S. cents at 11:37 a.m. in Sydney from 71.03 cents before the report was released. The two-year bond yield was little changed at 2.98 percent.

Some economists including Tim Toohey, of Goldman Sachs Group Inc. in Sydney, expect waning global demand for commodities, especially from China for iron ore, will force businesses to pare investment and push Australia into a recession.

Confidence Drop

Business confidence fell to a record low in November and the jobless rate climbed to 4.4 percent, the highest in a year, from a three-decade low of 3.9 percent in February.

The central bank’s one percentage point interest-rate cut last month, the fourth reduction since early September, puts monetary policy at an “expansionary setting” to stoke business and consumer confidence, policy makers said on Dec. 16.

The rate cut had to be “large enough to have a noticeable effect on financing decisions of lenders and borrowers,” the Reserve Bank of Australia said in minutes of its Dec. 2 meeting.

Imports rose 2 percent in November. Consumer goods imports increased 6 percent.

Retail sales gained an average of just 0.1 percent a month in the first 11 months of 2008, according to government trend figures, down from 0.6 percent monthly growth in 2007.

The slide in consumer spending, which is hurting profits at retailers including Harvey Norman Holdings Ltd., was a key reason the government distributed A$8.9 billion at the start of last month to the elderly and families.

The Australian dollar has tumbled 28 percent since hitting a 25-year high of 98.49 U.S. cents on July 16, helping boost income from exports of raw materials.

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

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Meridian Energy’s Hydro Lakes Reach Capacity, Dam Overflows

By Tracy Withers

Jan. 8 (Bloomberg) -- Meridian Energy Ltd., New Zealand’s biggest electricity generator, is spilling water at its largest dam for the first time in almost four years as wet weather fills hydro storage lakes beyond their capacity.

About 200 cubic meters (52,800 gallons) a second of water is being spilled from Lake Benmore on the nation’s South Island, Claire Shaw, a spokeswoman for Wellington-based Meridian, said in an interview. Water began spilling from the nearby Lake Tekapo and Lake Pukaki in late December and that has flowed into Benmore.

“It’s the nature of a hydro system,” she said. “When we get to the top of the bucket that’s what has to happen. There’s too much water.”

New Zealand, which relies on dams for more than 60 percent of its power, is developing wind farms and other generation options as droughts regularly affect lake inflows. Last year, industrial users, including Rio Tinto Group’s Tiwai Point aluminum smelter, had to cut output as lake levels plunged, pushing power prices to records.

Storage in hydro lakes across New Zealand was 35 percent more than average yesterday. Tekapo and Pukaki make up 55 percent of national storage. Storage had slumped to less than 50 percent of average in June and July last year prompting a public power conservation program.

Power prices in the South Island have fallen 51 percent the past week, according to an index compiled by M-co, which operates the wholesale power market. Prices at Benmore are less than NZ$1 a megawatt-hour compared with more than NZ$100 three months earlier.

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

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Santos Delays Henry Gas Project as Vessel Unavailable

By Angela Macdonald-Smith

Jan. 8 (Bloomberg) -- Santos Ltd., Australia’s third-biggest oil and gas producer, will delay the start of the A$275 million ($196 million) Henry gas project off the southeast coast because of the unavailability of a vessel to install a pipeline.

Santos, the venture operator, advised that the pipe-laying ship is now not available to install the line in the first half of 2009, Sydney-based Australian Worldwide Exploration Ltd., a partner, said today in a statement to the Australian stock exchange. That means the Henry and Netherby discoveries won’t be able to be connected to the Casino field by mid-year, it said.

The start-up of the two Otway Basin fields will allow the venture, which includes Mitsui & Co., to expand sales to meet rising energy demand in Australia’s most-populous southeastern states. The gas is due to be delivered to CLP Holdings Ltd.’s TRUenergy Pty retailing and power generation unit.

The pipe-laying contractor has offered to carry out the work “in the next weather window, with mobilization in late 2009,” Australian Worldwide said in the statement. It didn’t give a revised start-up date for the project.

Adelaide-based Santos, which owns 50 percent of the Henry project, dropped as much as 50 cents, or 3.3 percent, to A$14.71 in Sydney trading, while Australian Worldwide, a 25 percent partner, fell as much as 5 percent to A$2.64. The moves compared with a decline of as much as 4 percent in the exchange’s benchmark energy index after crude-oil prices fell in New York.

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

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South Korea’s Spot LNG Imports to Fall Because of Milder Winter

By Shinhye Kang and Dinakar Sethuraman

Jan. 8 (Bloomberg) -- South Korea, the world’s second- biggest Liquefied Natural Gas buyer, may buy fewer spot cargoes of the cleaner-burning fuel as a milder winter and the global recession reduce demand.

Korea Gas Corp., which imports more than 95 percent of the country’s LNG, may buy at least six cargoes in December and January this year from the Atlantic Ocean region, according to AIS Live on Bloomberg, compared with 21 a year earlier. Prices of the fuel have declined by about half from a record in September because of a 71 percent plunge in crude oil prices since July.

“Korea will not buy until they have a real need, unlike in the past when they stocked for the winter in summer,” Tony Regan, an independent consultant and a former Royal Dutch Shell Plc executive, said in Singapore.

South Korea typically uses about 70 percent of its LNG between October and March to meet heating demand. A milder winter will cut demand for city gas while generators may use less fuel as factories cut their output because of the global recession.

“The country had its first winter cold wave alert earlier than last winter but overall winter temperature this year will be higher than past years’,” said Kim Seung Bae, a spokesman at the Korea Meteorological Administration.

Average temperatures from Dec. 1 to Dec. 25 this year was 2.0 degrees Celsius (36 degrees Fahrenheit), up from 1.9 Celsius degree in the same period last year, according to Kim.

Indian Competition

“There isn’t competition for spot cargoes as India is not buying,” Regan said. “Naphtha prices have gone so low that India has stopped buying spot LNG.”

There were no LNG imports since November by Shell in India, according to ship tracking data. That compares with an average three it bought every month this year. Naphtha now trades at less than $8 per million British thermal units in India on energy equivalent basis compared with $13 for imported LNG.

Competition for cargoes from Taiwan and Japan has dropped after demand for electricity declined in both nations because of the global recession. Tokyo Electric Power Co., the world’s biggest buyer of LNG after Korea Gas, has reduced imports for a second month in November.

South Korea’s industrial production fell by the most on record in November, confidence among manufacturers tumbled and exports declined by the most in almost seven years in November, adding to concern the economy is headed for its first recession in a decade. Macquarie Securities Ltd. forecasts the economy will contract 2 percent next year and UBS AG said it will shrink 3 percent.

Burn Less

Domestic sales at Korea Gas, the country’s dominant gas provider, already fell for a second month in November as energy- intensive industries cut consumption and reduced output.

Hyundai Motor Co., South Korea’s biggest automaker, temporarily halted operations at some production lines, while LG Display Co., the world’s second-largest maker of liquid-crystal displays, and Hynix Semiconductor Inc. have joined global rivals in cutting output to cope with cooling demand. Posco, Asia’s third-biggest steelmaker, will cut crude steel production for the first time in its 40-year history.

Falling gas consumption has increased the LNG stockpiles in South Korea, company and government officials said.

“Inventories are high and the tanks are full,” said Kim In Kee, an investor relations official at Korea Gas. The country consumes about 220,000 kiloliters of gas a day during the winter season in November through March.

The nation’s storage capacity at 5.44 million kiloliters is equivalent to about 9 percent of the country’s LNG imports last year, Koh Hun, an assistant director at the energy ministry, said without providing details on LNG inventories.

Cheaper Oil

Falling oil prices may prompt electricity suppliers to switch to fuel oil, curbing demand for natural gas, Kim Sang Gil, an investor relations official at Korea Gas Corp. The movement of LNG prices usually lags behind the changes of crude prices for 2- 3 months.

Korea Western Power Co., one of six generating units of Korea Electric Power Corp., bought 160,000 metric tons of high- sulfur fuel oil for January delivery on Dec. 5. Last year, the power producer bought 60,000 metric tons of fuel oil for January.

“Weather, economic condition and fuel oil prices will decide Korea Gas’ sales volume this winter,” Kim said.

LNG is natural gas that has been reduced to one-six- hundredth of its original volume at minus 161 degrees Celsius (minus 259 Fahrenheit) for transportation by ship to destinations not connected by pipeline.

To contact the reporters on this story: Dinakar Sethuraman in Singapore at dinakar@bloomberg.net; Shinhye Kang in Seoul at skang24@bloomberg.net.

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Russia, Ukraine Prepare to Resume Gas Talks After Supply Halt

By Maria Ermakova and Daryna Krasnolutska

Jan. 8 (Bloomberg) -- Russia and Ukraine prepared to resume talks on a dispute over natural gas prices which has disrupted shipments to Europe for the second time in three years, as freezing weather boosted power demand across the continent.

Russian President Dmitry Medvedev said yesterday Ukraine should agree to pay a market price for natural gas as the European Union sought to broker talks. Each side blamed the other for the cutoff in deliveries, which halted flows of Russian gas through Ukraine to Europe yesterday. Slovakia, Hungary and Bulgaria were among countries restricting supplies to customers.

The shutdown renewed calls in Western Europe to develop nuclear power plants and alternative sources of energy. Gas supplies are dwindling as temperatures as low as minus 25 degrees Celsius (minus 13 degrees Fahrenheit) in Germany and Poland spur demand for the fuel this week. U.K. natural gas prices have climbed 20 percent this week.

“They should come to an agreement pretty soon,” said Christian Kleindienst, senior credit analyst at UniCredit SpA in Munich. “The stakes are too high and neither side’s bargaining position is strong enough.” A deal could take place by “mid to end-January.”

Medvedev spoke with his Ukrainian counterpart Viktor Yushchenko by phone yesterday, the first high-level contact between the two sides since negotiations broke off on Dec. 31. Medvedev said Ukraine should get no discounts on its gas and should pay its full debt to Russia as soon as possible.

Market Price

EU Energy Commissioner Andris Piebalgs will meet with OAO Gazprom Chief Executive Officer Alexei Miller today in Brussels. Oleh Dubina, who heads Ukrainian utility NAK Naftogaz Ukrainy, will also travel to Belgian capital today. Naftogaz said it’s “ready to hold constructive talks with Gazprom wherever, the place doesn’t matter.”

Gazprom said yesterday it suspended transit supplies after discovering that Ukraine wasn’t shipping fuel intended for European customers to its final destination. Its European customers receive 80 percent of supplies through pipelines that cross Ukraine. The company said its overall deliveries to Europe were cut by about 60 percent yesterday.

European spot natural-gas prices declined amid signs cold weather may give way to warmer temperatures in coming days, reducing heating demand. Gas for next-month delivery in the U.K., Europe’s biggest gas market, dropped 4 percent to 58.3 pence a therm at 5:02 p.m. London time, according to broker ICAP Plc. That’s equal to $8.88 a million British thermal units.

‘Real Problems’

European Commission President Jose Barroso said “real problems” may arise unless transit flows resume through Ukraine. Russian and Ukrainian officials have accepted a proposal to have international monitors verify gas transit, Barroso told a press conference in Prague yesterday.

Hungary and Slovakia are most exposed to the stoppage because they depend more on the fuel for energy than other European nations, according to UniCredit SpA. The dispute has already lasted longer than a similar conflict in January 2006 which interrupted fuel shipments to Europe.

Hungary ordered industrial users of natural gas to switch to other fuels, a day after it stopped receiving Russian supplies through Ukraine. Turkish electricity producers cut output from their gas-fired power plants to conserve fuel.

Slovensky Plynarensky Priemysel AS, Slovakia’s dominant gas company, said it would curb deliveries to the largest industrial users. Affected companies include refiner Slovnaft AS, which consumes more than 1 million cubic meters of gas a day.

Austrian Stocks

OMV AG, Austria’s largest oil and gas producer, said it’s able to meet demand by tapping stockpiles, sourcing imports from elsewhere and using its own output. The Czech Republic’s RWE Transgas is using supplies from Norway and underground storage.

E.ON AG, Germany’s largest utility, increased the amount of gas it gets from non-Russian providers, taking “more than usual” from Norway and the Netherlands.

Eni SpA, Italy’s biggest energy company, reported a “substantial” interruption in gas supplies from the TAG pipeline yesterday.

Norway, the biggest supplier of gas to the EU after Russia, is producing natural gas at “more or less” full capacity and can do little in the short term to increase output, Deputy Petroleum and Energy Minister Liv Monica Stubholt said.

The Czech Republic, which holds the rotating EU presidency, called a meeting of ministers in Brussels today with Gazprom and Naftogaz representatives to seek a “technical solution.”

‘End of Tunnel’

“There’s a certain light at the end of the tunnel of an otherwise very complicated bilateral situation,” Czech Prime Minister Mirek Topolanek said yesterday.

Gazprom delivered about 170 million cubic meters of gas to Europe yesterday, compared with 420 million to 450 million cubic meters a day normally, the company’s Deputy Chief Executive Officer Alexander Medvedev said on a conference call yesterday. Gas is being supplied through Belarus and from underground storage.

Since 2006, European nations have diversified their sources of fuel and improved inventories. They are also using more gas, the source of 24 percent of the world’s energy consumption in 2007, to reduce emissions linked to global warming.

In 2006, Russia turned off all Ukrainian gas exports for three days, causing volumes to fall in the European Union, and also cut shipments by 50 percent last March during a debt spat.

IMF Bailout

Russia cut shipments intended for Ukraine’s domestic market Jan. 1, and accused Ukraine of siphoning off gas destined for other buyers. Gazprom has warned that Ukraine risks amassing a debt of “billions of dollars” if the conflict continues.

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, which paid $179.50 for its Russian gas last year, rejected a Gazprom offer last week of $250 for 2009 and says $201 would be fair.

Ukraine’s political leaders, Yushchenko and Prime Minister Yulia Timoshenko, are grappling with a financial crisis that has forced it to seek a $16.4 billion International Monetary Fund bailout.

To contact the reporters on this story: Maria Ermakova in Moscow on mermakova@bloomberg.net; Daryna Krasnolutska in Kiev on dkrasnolutsk@bloomberg.net

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Korean Won Weakens as Share Slide Prompts Global Funds to Sell

By Kim Kyoungwha

Jan. 8 (Bloomberg) -- South Korea’s won weakened, snapping a three day gain, as stock slides in the U.S. and Asia damped demand for riskier assets.

The currency, Asia’s worst performer of 2008, fell as foreign investors sold more Korean shares than they bought for the first time in seven days. The Kospi stock index slid 1.4 percent, after yesterday posting its highest close in almost three months.

“The currency’s rally this week was seen as temporary,” said Lee Myung Hoon, a currency dealer with Industrial Bank of Korea in Seoul. “Sentiment was buoyed by expectations the new year would be different, but people are waking up to reality.”

The won fell 1.8 percent to 1,317 per dollar as of 9:50 a.m. in Seoul, according to Seoul Money Brokerage Services Ltd. The currency’s 15 percent gain in December, the best month in a decade, pared last year’s drop to 26 percent. It will slide to 1,425 per dollar this quarter, according to the median forecast of analysts surveyed by Bloomberg News.

The economy may shrink in the first half of 2009 amid a slowdown in exports, rising unemployment and frail consumption, President Lee Myung Bak said last month. It probably contracted in the last quarter of 2008 for the first time in five years, the central bank said.

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

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Philippines, Turkey Sell $2.5 Billion of Dollar Bonds

By Clarissa Batino and Lester Pimentel

Jan. 8 (Bloomberg) -- The Philippines and Turkey sold $2.5 billion of bonds in international markets, joining a push by developing nations to take advantage of a decline in borrowing costs to finance budget deficits.

The Philippines sold $1.5 billion of 10-year notes to yield 8.5 percent, or 6 percentage points more than U.S. Treasuries, while Turkey sold $1 billion of eight-year bonds to yield 5.01 percentage points above Treasuries. The countries follow Brazil and Colombia, which each sold $1 billion of bonds this week.

The Philippines sale, which is triple the amount it issued all last year, will help the government arrange financing for a stimulus plan that aims to pull the Southeast Asian nation out of its worst economic slump in eight years.

“The Philippines has a first-mover advantage and good timing before the rest crowd international debt markets,” said Vishnu Varathan, a regional economist at Forecast Singapore Pte. “Chances are that credit will become tighter down the road given the huge fiscal expansion of governments including the U.S.”

Yields on emerging-market debt have declined the past two months, reversing a surge in September and October sparked by the global financial crisis. The extra yield investors demanded for Philippine dollar debt over 10-year U.S. Treasuries dropped to 5.9 percentage points from as high as 9.85 percentage points in October, ING prices show.

Widening Deficit

The sale completes the Philippines’s foreign bond program for the year, Treasurer Roberto Tan said today in a telephone interview. ING Groep NV forecasts emerging-market dollar bond sales may rise 68 percent to $65 billion this year. South Korea’s government plans to borrow up to $6 billion this year and Indonesia in November said it may raise about $2.1 billion in dollar-denominated debt in 2009.

The Philippine government asked Congress to approve a 9 percent increase in spending, excluding interest payments, to stoke the economy. It predicts the budget deficit will widen to the most in four years in 2009 as revenue collection falters. Economic growth may slow to 3.7 percent this year, which would be the weakest since 2001, according to government estimates.

The government boosted its domestic borrowing plan this year by 20 percent to 386.5 billion pesos ($8.3 billion) from an earlier plan of 321.5 billion pesos, Finance Secretary Gary Teves said in November.

Standard & Poor’s rates the Philippines’s foreign-currency debt BB-, or three levels below investment grade. Moody’s rates it B1, four levels below investment grade, while Fitch Ratings rates it BB, two levels below. Turkey’s bonds are rated Ba3, or three steps below investment grade, by Moody’s, and BB- by S&P.

Credit Suisse Group, Deutsche Bank AG and HSBC Holdings Plc managed the $1.5 billion bond sale. Citigroup Inc. and HSBC managed Turkey’s sale.

Brazil on Jan. 6 sold 10-year notes to yield 6.13 percent, or 3.7 percentage points above U.S. Treasuries, while Colombia sold 10-year securities to yield 5.03 percentage points more than Treasuries. Chilean Finance Minister Andres Velasco said that day the government may issue its first foreign bonds since 2004 to help fund a fiscal stimulus plan.

To contact the reporter on this story: Clarissa Batino in Manila at cbatino@bloomberg.net; Lester Pimentel in New York at lpimentel1@bloomberg.net

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Yen, Singapore Dollar, Thailand’s Baht: Asian Currency Preview

By Bob Chen

Jan. 8 (Bloomberg) -- The following events and economic reports may influence trading in Asian currencies today. Exchange rates are from the previous session.

Japanese yen: Chief Cabinet Secretary Takeo Kawamura will hold press briefings at 11 a.m. and at 4 p.m. in Tokyo.

The Ministry of Finance will release at 8:50 a.m. in Tokyo its report on the purchases and sales of Japanese and overseas securities by domestic and foreign investors during the weeks ended Dec. 26 and Jan. 2.

The yen was at 92.56 a dollar at 8:33 a.m. in Sydney.

Taiwan dollar: Exports slumped by a record 42 percent in December from a year earlier, the Ministry of Finance said yesterday. The central bank unexpectedly cut its benchmark interest rate yesterday for the sixth time since late September. It lowered the discount rate on 10-day loans to banks to 1.5 percent, the lowest since 2004, from 2 percent.

The Taiwan dollar traded at NT$32.98.

Hong Kong dollar: Foreign-exchange reserves rose to $182.5 billion at the end of December, the most since records began in 1988, from $165.9 billion the previous month, the Hong Kong Monetary Authority reported yesterday after trading hours.

The local dollar was at HK$7.7514.

Singapore dollar: Foreign reserves at the end of December climbed to $174.2 billion, from $165.7 billion the previous month, the Monetary Authority of Singapore reported yesterday.

The city-state’s currency was at S$1.4715.

Thai baht: The world’s biggest exporter of rice and rubber may produce fewer commodities this year as a global recession weakens buyers’ purchasing power. Rice output may fall 1.6 percent this year from 2008, while rubber production will probably drop 1.3 percent, the farm ministry said yesterday.

The baht was at 34.87.

To contact the reporters on this story: Bob Chen in Hong Kong at bchen45@bloomberg.net.

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Australia, New Zealand Dollars Drop on Commodities, U.S. Jobs

By Ron Harui

Jan. 8 (Bloomberg) -- The Australian and New Zealand currencies fell, snapping three days of gains versus the U.S. dollar, as prices of commodities that make up more than half the nations’ exports declined the most in three months.

The currencies also ended a five-day winning streak against the yen after a private report showed U.S. companies cut the most jobs in seven years last month, spurring investors to sell higher-yielding assets. Australia’s dollar extended losses versus the U.S. currency after home-building approvals dropped the most in six years in November, adding to signs of an economic slowdown.

“Risk appetite has deteriorated and equity markets obviously had a very poor session,” said Sean Callow, a senior currency strategist at Westpac Banking Corp. in Sydney. “This is weighing on the Australian and New Zealand dollars.”

Australia’s dollar fell to 70.75 U.S. cents at 11:52 a.m. in Sydney, from 72.07 cents late in Asia yesterday. It earlier reached a three-month high of 72.69 cents. The currency slid 2.3 percent, the most since Dec. 19, to 65.63 yen from 67.19 yesterday when it touched 68.26, the strongest since Nov. 11.

New Zealand’s dollar declined to 58.65 U.S. cents from 59.65 cents in Asia yesterday. It earlier reached 60.33 cents, the most since Dec. 18. The currency weakened to 54.44 yen from 55.61 yesterday when it touched 56.33, the highest since Nov. 14.

The number of permits granted to build or renovate houses and apartments fell 12.8 percent in November, the steepest drop since November 2002, following a revised 3.1 percent decline in October, the Bureau of Statistics said in Sydney. The median estimate in a Bloomberg News survey of economists was for a 1.5 percent loss.

Companies in the U.S. eliminated 693,000 jobs in December, the most since records began in 2001, ADP Employer Services said yesterday. The median forecast in Bloomberg survey of 24 economists was for a reduction of 495,000.

‘Risk Aversion’

The MSCI Asia-Pacific Index of regional equities weakened 1.8 percent after the Standard & Poor’s 500 Index of U.S. equities fell 3 percent yesterday, trimming this year’s advance to less than 0.4 percent.

“The U.S. jobs report and sharp falls in equities are causing risk aversion to rear its head,” said Besa Deda, chief economist at St. George Bank Ltd. in Sydney. “Risk aversion generally hampers demand for the Australian dollar,” she said.

The Reuters/Jeffries CRB Index of 19 raw materials fell 4.7 percent to 231.49 yesterday, the largest loss since Oct. 10. The Bloomberg UBS Constant Maturity Commodity Index of 26 components slipped 4.2 percent to 905.91, the biggest decline since Dec. 5.

Benchmark interest rates are 4.25 percent in Australia and 5 percent in New Zealand, 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.

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

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Euro Falls Against Dollar Before Jobless, Retail Sales Data

By Stanley White

Jan. 8 (Bloomberg) -- The euro fell against the dollar before data that may show the jobless rate rose and retail sales declined in the countries that share the currency, bolstering speculation the European Central Bank will lower interest rates.

The euro also traded near a three-week low versus the yen as derivatives showed investors are betting the ECB will lower its key rate by at least a quarter of a percentage point next week. The Australian dollar weakened against the U.S. currency after home building approvals in the country slumped.

“Disappointing economic data expose the euro to selling pressure,” 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 market is pricing in a rate cut and there is interest in selling the euro.”

The euro fell to $1.3568 as of 9:45 a.m. in Tokyo from $1.3644 late yesterday in New York. It bought 125.90 yen from 126.42 yen. The dollar traded at 92.78 yen from 92.65 yen. The pound weakened to $1.5050 from $1.5095. The euro may decline to $1.3520 today, Tokita said.

The European unemployment rate increased to 7.8 percent in November from 7.7 percent in the previous month, according to a Bloomberg News survey of economists before the release of the data later today. A separate report due tomorrow will show retail sales in the 16 countries using the euro fell 1.7 percent in November from a year earlier after a 2.1 percent decline in the previous month, according to another survey.

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

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Oil Falls on Bigger-Than-Expected Inventory Gain, Lower Demand

By Mark Shenk and Samantha Zee

Jan. 8 (Bloomberg) -- Oil futures dropped for a third day after a U.S. government report showed bigger-than-expected gains in supplies of crude, gasoline and distillate fuel as consumption dropped.

Inventories of crude oil rose 6.68 million barrels to 325.4 million barrels last week, the highest since May, the Energy Department said yesterday in a weekly report. Supplies were forecast to increase by 800,000 barrels, according to the median of forecasts by 14 analysts in a Bloomberg News survey.

“We have the making of a huge glut here,” said Phil Flynn, senior trader at Alaron Trading Corp. in Chicago. “Supplies are more than adequate and should continue to rise because demand is so poor.”

Crude oil for February delivery fell as much as 39 cents, or 0.9 percent, to $42.24 a barrel on the New York Mercantile Exchange, and was at $42.37 at 7:48 a.m. Singapore time.

Yesterday, futures dropped $5.95, or 12 percent, to $42.63 a barrel, the lowest settlement since Dec. 30. The decline was the biggest since Sept. 24, 2001. Futures on the exchange are down 55 percent from a year ago.

Inventories at Cushing, Oklahoma, where oil that’s traded on Nymex is stored, climbed 14 percent to 32.2 million barrels last week, the highest since at least April 2004, when the department began keeping track of supplies there.

“We’re pushing up toward capacity limits,” said Lawrence Eagles, global head of commodities research at JPMorgan Chase & Co. in New York. “There’s still a bit of space, but not much.”

Contango

The price of oil for delivery in February 2010 is 41 percent more than for the current month, increasing the opportunity for traders to profit. This structure, in which the subsequent month’s price is higher than the one before it, is known as contango. Contango trading encourages companies to increase stockpiles if they have available storage.

“It’s not a surprise we’re building inventories,” said Tom Knight, trading director at Truman Arnold Cos. in Texarkana, Texas. “Look at the contango. You’d be an idiot not to take advantage of that.”

Volume in electronic trading on the exchange was 535,890 contracts as of 3:05 p.m. in New York yesterday. Volume totaled 649,999 contracts on Jan. 6, up 38 percent from the average over the past 3 months. Open interest on Jan. 6 was 1.22 million contracts. The exchange has a one-business-day delay in reporting open interest and full volume data.

Gasoline inventories rose 3.33 million barrels to 211.4 million barrels, the department said. Supplies were forecast to increase by 1 million barrels. Distillate supplies, which include heating oil and diesel, climbed 1.79 million barrels to 137.8 million barrels. A gain of 1.1 million barrels was forecast.

Fuel Prices

Gasoline futures for February delivery dropped 11.28 cents, or 9.5 percent, to settle at $1.0764 a gallon in New York. Heating oil for February delivery fell 8.32 cents, or 5.1 percent, to end the session at $1.5431 a gallon.

Regular gasoline at the pump, averaged nationwide, rose 3.9 cents to $1.727 a gallon, AAA, the largest U.S. motorist organization, said on its Web site today. It was the biggest one- day increase since September. Prices have dropped 58 percent from the record $4.114 a gallon reached on July 17.

U.S. fuel consumption during the four weeks ended Jan. 2 averaged 20.1 million barrels a day, down 2.9 percent from a year earlier, the Energy Department report showed.

Imports of crude oil increased 13 percent to 10.5 million barrels a day last week, the biggest one-week gain since the week ended Oct. 3, when the Gulf Coast was recovering from hurricanes Gustav and Ike.

Refineries operated at 84.6 percent of capacity last week, up 2.1 percentage points from the week before, the report showed. Analysts forecast that there would be no change in utilization.

Geopolitical Tension

Earlier this week, crude reached a five-week high on the conflict between Israel and Hamas in the Gaza Strip, Russia’s gas dispute with Ukraine, and signs that OPEC members are enacting supply cuts. It later fell as manufacturing data indicated the U.S. recession is deepening.

The U.S. inventory numbers “are obviously quite dramatic, but should not really have been a surprise,” Eagles said. “There are significant issues in the Middle East and concerning gas in Europe, but how long will they remain a major worry?”

Brent crude oil for February settlement declined $4.67, or 9.2 percent, to settle at $45.86 a barrel on London’s ICE Futures Europe exchange.

Saudi Foreign Minister Prince Saud al-Faisal said oil “isn’t a weapon” to end fighting in the Middle East. Prince al- Faisal, speaking at a press conference in New York, said oil “can’t reverse a conflict,” when asked about an Iranian call for Arab states to stop producing as a means of putting pressure on countries backing Israel.

Oil surged in 1974, helping spur a recession in the developed world, after an oil embargo that followed the Arab- Israeli war in October 1973.

Weak Economy

“The violence in Gaza and the natural-gas crisis in Europe aren’t enough to keep the rally going when the economy is so weak,” said Gene McGillian, an analyst at Tradition Energy in Stamford, Connecticut. “It looks like the $50 area will be the top of our range.”

Frontline Ltd., the world’s biggest owner of supertankers, said oil traders want to charter as many as 10 vessels to hold crude to take advantage of higher prices later in the year.

About 25 supertankers were already hired for storage and there are inquiries for 5 to 10 more, Jens Martin Jensen, Singapore-based interim chief executive officer of the company’s management unit, said by phone today.

To contact the reporter on this story: Mark Shenk in New York at mshenk1@bloomberg.net; Samantha Zee in Los Angeles at szee@bloomberg.net.

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Satyam Accounting Scandal Erodes Confidence in India Equities

By Pooja Thakur

Jan. 8 (Bloomberg) -- The accounting scandal that caused Satyam Computer Services Ltd. to collapse yesterday is shaking investor confidence in Indian stocks, putting an end to the market’s best start since 2000.

“How did they manage to conceal a fraud of such magnitude even from the auditors?” said Greg Kuhnert, a London-based fund manager at Investec Asset Management Ltd., which manages about $10 billion and sold its 0.15 percent stake in Satyam last month. “That to me is a huge concern and is making me very nervous about the situation in India now.”

India’s Sensex index tumbled 7.3 percent yesterday, led by a 78 percent plunge in Satyam, after Chairman Ramalinga Raju said profits at the company had been inflated for years and then resigned. Satyam American depositary receipts fell $8.42, or 90 percent, to 93 cents before the opening of the New York Stock Exchange, which then halted trading in the stock.

Just six weeks after Franklin Templeton Investments’ Mark Mobius said the world’s second-fastest growing major economy would overcome the Mumbai terrorist attacks and prosper, his company said the Satyam scandal will weigh on investors.

“This unfortunate development will be a short-term negative for market sentiment,” Sukumar Rajah, chief investment officer of equity in India at Franklin Templeton Investments, which manages $4 billion of assets in the country, said in an e-mail.

Still, by forcing regulators to improve oversight, the incident “should be a long term positive,” Rajah said.

‘Horrifying’

India’s markets regulator C.B. Bhave said the Satyam disclosure was of “horrifying magnitude.” The Securities & Exchange Board of India ordered a probe into trading in Satyam shares, according to the regulator’s Web site.

“We are verifying all the facts,” Prem Chand Gupta, India’s minister for company affairs, said in New Delhi yesterday. “Once we complete our investigation, we will take appropriate action,” he said, adding that “there will be no leniency.”

Satyam, which means “truth” in Sanskrit, shook the market after the Sensex had rebounded 7 percent in the first four days of the year and global investors turned net buyers of Indian shares. The index plunged 52 percent in 2008 and investors pulled a record $13.1 billion from the market last year, according to the nation’s stock market regulator.

Cheap Stocks

Developing-nation stocks are trading near their cheapest levels in a decade after the global economic slowdown and a slump in commodity prices sent the MSCI Emerging Markets Index down 54 percent in 2008. In comparison, the MSCI World Index dropped 42 percent. Shares in the MSCI emerging-markets index trade at 8.8 times reported earnings, while developed shares fetch 11.5 times profit. Sensex companies trade at 9.5 times earnings.

Aberdeen Asset Management Asia Ltd., Satyam’s largest institutional investor as of September, said its investment outlook for India hasn’t changed. Funds run by Aberdeen own at least 5.12 percent of Satyam, according the Hyderabad-based company’s filings for the quarter ended Sept. 31.

“People will grow a bit more dispassionate, but you can say the same for the U.S. and elsewhere,” said Hugh Young, managing director at Aberdeen’s Asian unit, which manages $37.3 billion. “India has great companies that do the right things. Hopefully this is a one off.” He declined to say how many Satyam shares Aberdeen holds, or whether any were sold recently.

India’s $1.2 trillion economy may grow 7 percent in the year ending March 31, the slowest pace since 2003, according to government forecasts. The economy may expand at close to that rate in the next fiscal year as the global recession cuts exports and domestic demand wanes, Junior Industry Minister Ashwani Kumar said in New Delhi yesterday.

Concern

The Satyam scandal is spurring concern that India’s corporate governance is inadequate days before the earnings reporting season starts. Infosys Technologies Ltd., the country’s second-largest software services provider, will report its financial results for the quarter ended Dec. 31 on Jan. 13.

PricewaterhouseCoopers LLP, Satyam’s auditor, declined to comment on the scandal, according to an e-mail from the New York- based firm’s public relations adviser Edelman.

“It may take a while to restore the lost confidence,” Rahul Chadha, head of Indian equities in Hong Kong for Mirae Asset Global Investment, which oversees $39 billion. India “was attractive primarily on account of quality of managements and robust business models,” Chadha said.

To contact the reporters on this story: Pooja Thakur in Mumbai at pthakur@bloomberg.net

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Babcock, Huaneng, KLCC, PLDT: Asia Ex-Japan Equity Preview

By Ian C. Sayson

Jan. 8 (Bloomberg) -- The following companies may have unusual price changes in Asia trading, excluding Japan. Stock symbols are in parentheses, and share prices are from the previous close, unless noted otherwise.

Taiwan financial stocks: The nation’s central bank said it cut its benchmark interest rate to 1.5 percent from 2 percent and that local banks have agreed to boost lending. Cathay Financial Holding Co. (2882 TT), the largest listed financial- services company, gained 10 cents, or 0.3 percent, to NT$37.9. Fubon Financial Holding Co. (2881 TT), the second-biggest listed financial-services company, fell 30 cents, or 1.3 percent, to NT$23.6.

Babcock & Brown Ltd. (BNB AU): The Australian asset manager whose stock tumbled 99 percent last year said impairment charges mean its liabilities substantially outweigh its assets. Babcock tumbled 6 cents, or 16 percent, to 32.5 cents.

Bina Puri Holdings Bhd. (BIN MK): The Malaysian builder said it won a 24.6 million ringgit ($7.02 million), seven-month contract to build a warehouse and office building in Thailand. The project will increase Bina’s order book to about 1.8 billion ringgit, it said. Bina dropped 3 sen, or 3.5 percent, to 82 sen.

Formosa Petrochemical Corp. (6505 TT): Taiwan’s only publicly traded oil refiner said its sales declined 61 percent to NT$30.82 billion in December from a year earlier. The stock gained 40 cents, or 0.6 percent, to NT$70.2.

Huaneng Power International Inc. (902 HK): The unit of China’s biggest power producer said its output increased 6.3 percent last year to 184.6 billion kilowatt-hours. The stock fell 33 cents, or 5.8 percent, to HK$5.37.

Hyundai Mobis Co. (012330 KS): South Korea’s biggest auto- parts maker said it scrapped a plan to merge with affiliate Hyundai Autonet Co. (042100 KS) because it would cost too much. Hyundai Mobis added 2,000 won, or 2.9 percent, to 70,000 won. Autonet increased 85 won, or 2.9 percent, to 3,045 won.

KLCC Property Holdings Bhd. (KLCC MK): Daewoo Engineering & Construction Co. (047040 KS), South Korea’s biggest builder, won a 665 million ringgit contract to build the main superstructure of a mixed development in Kuala Lumpur, said KLCC, the owner of the project. KLCC rose 2 sen, or 0.7 percent, to 2.90 ringgit. Daewoo gained 1,400 won, or 15 percent, to 11,000 won.

Noble Group Ltd. (NOBL SP): The Hong Kong-based commodity supplier said its shipping unit being sued in California after an oil spill is insured for such claims. The stock, which is traded in Singapore, gained 2 cents, or 1.7 percent, to S$1.20.

Philippine Long Distance Telephone Co. (TEL PM): The nation’s biggest company by market value said it agreed to buy 340 million pesos of debt owed by Philcom Corp. PLDT, as the company is called, also said it agreed to buy shares in its smaller rival for 75 million pesos, giving it room to expand its broadband network in the southern island of Mindanao. PLDT fell 30 pesos, or 1.4 percent, to 2,160 pesos.

Pilipino Telephone Corp. (PLTL PM): The nation’s third- biggest mobile phone company said it bought back 3 million shares at 7.10 pesos each, bringing its treasury stocks to 49.59 million.

San Miguel Corp. (SMC PM): The largest Philippine food and drinks company said it may borrow funds to complete the purchase of Sea Refinery Corp., which owns 50.1 percent stake in Petron Corp. San Miguel Class A shares, which only Filipinos can own, were unchanged at 41.50 pesos. Its Class B shares (SMCB PM), which have no ownership restrictions, added 1.50 pesos, or 3.5 percent, to 44 pesos. Petron (PCOR PM), the nation’s biggest oil refiner, fell 10 centavos, or 2 percent, to 4.85 pesos.

SK Telecom Co. (017670 KS): South Korea’s largest wireless carrier denied a Herald Business newspaper report that it is seeking to buy a stake in online game-portal operator, CJ Internet Corp. (037150 KS). SK Telecom fell 500 won, or 0.2 percent, to 204,500. CJ Internet, which also denied the report, increased 300 won, or 2.4 percent, to 12,700 won.

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

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Australia Stocks: BHP, Minara, Equinox, Macquarie, Woodside

By Shani Raja

Jan. 8 (Bloomberg) -- The S&P/ASX 200 Index fell 76.80 points, or 2 percent, to 3,702.90 at 11:10 a.m. in Sydney, the most since Dec. 12. The broader All Ordinaries Index declined 75.10 points, or 2 percent, to 3,653.10, while the futures contract expiring in March slipped 2.3 percent to 3,688.

Mining shares: BHP Billiton Ltd. (BHP AU), the world’s largest mining company, plunged A$1.60, or 4.9 percent, to A$31, the most since Dec. 5. Rio Tinto Group (RIO AU), the third- biggest, slumped A$1.79, or 3.8 percent, to A$45.14. Minara Resources Ltd. (MRE AU), an Australian nickel producer controlled by Glencore International AG, lost 3 cents, or 7.1 percent, to 39.5 cents.

Copper futures for March delivery fell 4.5 percent to $1.5115 a pound in New York after a report showed U.S. companies eliminated more jobs than forecast in December, renewing concern slower economic growth will stifle metal demand.

A measure of six metals traded in London dropped 2.1 percent. Copper fell 1.5 percent, zinc 2.3 percent and nickel 7.2 percent.

Coal producers: Macarthur Coal Ltd. (MCC AU), the world’s biggest exporter of pulverized coal, dropped 11 cents, or 3.5 percent, to A$3.07, the lowest since Dec. 31. Gloucester Coal Ltd. (GCL AU) fell 9 cents, or 2.1 percent, to A$4.11.

Peabody Energy Corp., the largest U.S. coal producer, reduced its forecast for 2009 output from mines in Australia as the global economic slump reduces demand. Australian shipments will decline to between 22 million and 24 million tons from about 24 million last year, it said.

Oil companies: Woodside Petroleum Ltd. (WPL AU) plunged A$1.84, or 4.8 percent, to A$36.93, the most since Dec. 18. Santos Ltd. (STO AU) dropped 36 cents, or 2.4 percent, to A$14.85.

Oil futures tumbled 12 percent to $42.74 a barrel at the 2:30 p.m. close of floor trading in New York, the most in more than seven years, after a U.S. government report showed a bigger- than-expected increase in supplies of crude oil, gasoline and distillate fuel as demand dropped.

Equinox Minerals Ltd. (EQN AU), the company developing the Lumwana mine in Zambia, dived 45 cents, or 19 percent, to A$1.94, the most since Oct. 24. Equinox said it’s deferring the construction of a uranium treatment plant because of the drop in the price of the metal and difficulty raising financing.

Macquarie Group Ltd. (MQG AU), Australia’s largest investment bank, plunged A$1.97, or 5.8 percent, to A$31.78, the most since Dec. 2.

The company said “exceptionally challenging” market conditions in the December quarter will dent profitability as it cuts assets to weather the global credit crunch. Bendigo & Adelaide Bank Ltd. will buy A$1.5 billion of margin loans from Macquarie for A$52 million, the banks said in a joint statement.

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

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Asian Stocks Drop, Wiping Out Most of 2009 Gains; Sony Declines

Jan. 8 (Bloomberg) -- Asian stocks fell, wiping out most of the benchmark index’s 2009 gains, as concern global economic conditions are worsening dented the outlook for profits and drove oil prices lower.

Sony Corp. lost 6.3 percent as a private report showed U.S. employers cut more jobs than estimated in December and the yen strengthened against the dollar. BHP Billiton Ltd., Australia’s No. 1 oil producer, retreated 4.6 percent in Sydney after crude fell the most in more than seven years yesterday. Macquarie Group Ltd., Australia’s biggest securities firm, slid 5.2 percent after saying “exceptionally challenging” conditions will erode profitability.

The MSCI Asia Pacific Index dropped 2.1 percent to 90.40 as of 10:11 a.m. in Tokyo, trimming its gain this year to 0.8 percent. The gauge slumped 43 percent in 2008, its worst annual loss in its 20-year history. The index has rebounded 20 percent in the past six weeks as interest rate cuts and spending packages by governments from India to Australia boosted confidence in a swift recovery of the economy.

“We’ve seen strong rallies on hopes that all the stimulus spending will start to kick in,” said Nader Naeimi, a Sydney- based senior investment strategist at AMP Capital Investors, which manages about $85 billion. “The fact that unemployment is picking up creates nervousness, and shifts the focus back onto the broader economic challenges.”

Japan’s Nikkei 225 Stock Average slumped 2.2 percent to 9,039.82, snapping a seven-day winning streak that was the longest stretch of gains in almost three years. All indexes open for trading declined.

U.S. Jobs

In the U.S., the Standard & Poor’s 500 Index fell 3 percent yesterday. Intel Corp. slumped 6.1 percent after sales in the latest quarter trailed its forecast amid weakening demand.

U.S. companies cut an estimated 693,000 jobs in December, according to ADP Employer Services, the most since the survey began in 2001. The decline was larger than the 495,000 drop estimated by economists in a Bloomberg survey.

Crude oil for February delivery plummeted 12 percent to $42.63 a barrel in New York, the steepest drop since September 2001. The Japanese currency appreciated to as much as 92.48 today from 93.96 at the close of stock trading in Tokyo yesterday.

For Related News: Stories on Asian stocks: TNI STK ASIA For most read Asian stories: MNI ASIA

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