Euro Falls Versus Dollar, Yen on Speculation ECB Will Cut Rates

By Ron Harui

Jan. 12 (Bloomberg) -- The euro fell for a second day against the dollar as traders raised bets that the European Central Bank will cut interest rates to the lowest since 2005 at its Jan. 15 meeting.

The currency also dropped to a one-month low versus the yen as Bank of America and Deutsche Bank AG forecast the 16-nation region’s economy will contract 2.5 percent this year. The difference in yield between two-year German and Japanese government bonds narrowed to the least in 18 years, according to data compiled by Bloomberg.

“A large portion of the euro’s demise has been predicated on the view that the ECB is falling behind the curve,” said Sue Trinh, a senior currency strategist at RBC Capital Markets in Sydney. “The market has priced in a 50 basis-point rate cut from the ECB.”

The euro dropped to $1.3405 as of 10:12 a.m. in Tokyo from $1.3476 late in New York on Jan. 9. The currency also declined to 120.73 yen from 121.81 yen. It touched 120.42 yen, the weakest since Dec. 12. Against the British pound, the euro traded at 88.84 pence from 88.78 pence.

The yen rose to 90.07 per dollar from 90.39 late in New York on Jan. 9. It also climbed to 62.80 against Australia’s dollar from 63.59 and gained to 52.91 versus New Zealand’s dollar from 53.49. It advanced the most against South Korea’s won, rising 1.3 percent to 15.03886.

‘Soft’ Data

Thirteen of the 16 most-active currencies strengthened against the euro as traders increased bets that the ECB will cut its 2.5 percent benchmark interest rate at this week’s meeting. The implied yield on the Eonia forward contract fell to 1.748 percent on Jan. 9 from 1.813 percent on Jan. 8. Eonia is the euro overnight index average.

The difference in yield between Japanese and German two-year notes narrowed to 1.13 percentage points on Jan. 9 from 1.21 percentage points on Jan. 8, the least since 1990.

“The recent run of soft euro-zone data has heightened expectations that the ECB will cut by 50 basis points to 2 percent and concern about the euro-zone outlook will likely keep the euro-dollar defensive early this week,” Danica Hampton, currency strategist at Bank of New Zealand Ltd. in Wellington, wrote in a research note today.

Accelerating job cuts and declining investment may shrink the European economy by 2.5 percent in 2009, according to Bank of America and Deutsche Bank AG. That’s five times the rate of contraction the ECB staff projected last month.

Nordic Currencies

The world’s biggest foreign-exchange traders are snapping up Sweden’s krona and Norway’s krone.

Current-account surpluses and forecasts by the Organization for Economic Co-operation and Development that Nordic economies will avoid the worst of the global recession made the currencies Goldman Sachs Group Inc.’s top picks for 2009, with potential gains of more than 17 percent.

Deutsche Bank, the biggest trader in the $3.2 trillion-a-day market, said last week the krone and krona are “well placed” for a rebound.

“It’s pretty clear the Scandinavian currencies weakened excessively last year,” said Thomas Stolper, a foreign-exchange analyst at Goldman Sachs in London. “These economies should hold up better than euroland and with improvements in market conditions some of this misalignment will be reversed.”

Stocks Fall

Japan’s currency gained for a fourth day against the Australian and New Zealand dollars before a U.S. government report this week that may show retail sales contracted for a fifth month in December, adding to signs the recession in the world’s largest economy is deepening.

Asian stocks fell, following losses in Europe and the U.S. on Jan. 9. The MSCI Asia-Pacific Index of regional shares excluding Japan dropped 1.2 percent. Japan is closed today for a public holiday.

“The bias remains for more upside for the yen on the crosses, with risk aversion back in play on continued dismal readings” for the global economy, RBC’s Trinh said.

Sales at U.S. retailers declined 1.2 percent last month, capping the longest stretch of declines since records began in 1992, according to a Bloomberg News survey of economists. The Commerce Department will release the report on Jan. 14.

Implied volatility on one-month Australian dollar options against the yen rose to 32.79 percent from 32.44 percent on Jan. 9, indicating greater exchange-rate fluctuation risks that can erode profit on 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. 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.

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

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Australia, New Zealand Dollars Fall After Slump in U.S. Stocks

By Tracy Withers

Jan. 12 (Bloomberg) -- The Australian and New Zealand dollars fell after stock declines and a rising U.S. jobless rate reduced appetite for higher-yielding assets.

Unemployment in the U.S. climbed to 7.2 percent in December, the highest level in almost 16 years, adding to signs of a global economic slowdown that reduces risk appetite, according to a Jan. 9 report. The Standard & Poor’s 500 stock index fell 2.1 percent.

“Last week’s weak global data provided a reality check and reaffirmed that the global outlook for 2009 remains dismal,” said Danica Hampton, currency strategist at Bank of New Zealand Ltd. in Wellington. “Any further losses in global equities should see investors ditch growth-sensitive currencies like the New Zealand dollar.”

Australia’s dollar fell to 70.01 U.S. cents at 8:25 a.m. in Sydney from 70.34 cents in late New York trading on Jan. 9. The currency dropped to 63.11 yen from 63.59.

New Zealand’s dollar declined 0.6 percent to 58.85 U.S. cents from 59.20 cents in Asia yesterday. It traded at 53.07 yen from 53.52 yen on Jan. 9.

The benchmark interest rate in New Zealand is 5 percent, compared with 0.1 percent in Japan and as low as zero in the U.S., making the South Pacific nation an attractive destination for international investors seeking higher returns. Australia’s key lending rate is 4.25 percent.

Weighing on the Australian and New Zealand currencies, the euro fell the most versus the U.S. dollar since October on speculation the European Central Bank will lower interest rates on Jan. 15.

The ECB will cut its target rate by a half percentage point to 2 percent, according to the median forecast of 32 economists surveyed by Bloomberg News.

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

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Copper Futures in Shanghai Jump 5% Limit to 28,140 Yuan a Ton

By Glenys Sim

Jan. 12 (Bloomberg) -- Copper futures jumped by the exchange-imposed 5 percent daily limit in Shanghai as some investors stepped up arbitrage trading to take advantage of the price gap between London and Shanghai.

Copper for March delivery on the Shanghai Futures Exchange rose 1,340 yuan from the previous settlement price to 28,140 yuan ($4,117) a metric ton.

London Metal Exchange copper gained as much as 3.2 percent to $3,510 a ton, and traded at $3,500 a ton at 9:25 a.m. Singapore time.

To contact the reporter for this story: Glenys Sim in Singapore at gsim4@bloomberg.net

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Oil Falls on Concern Demand to Drop More Rapidly Than Supply

By Angela Macdonald-Smith and Christian Schmollinger

Jan. 12 (Bloomberg) -- Crude oil fell for a fifth day in New York, extending last week’s 12 percent drop, on concern demand will decline more rapidly than the Organization of Petroleum Exporting Countries cuts output.

Deutsche Bank AG on Jan. 10 lowered its forecast for the average price of crude oil this quarter by $10 to $45 a barrel, citing expectations consumption will fall by 1 million barrels a day this year. U.S. supplies have climbed in 13 of the past 15 weeks as the economy slows, according to the Energy Department.

“What OPEC has done is probably going to be enough to tighten up the market and support the oil price, but it will take a while for those production cuts to eat away at inventories,” said David Moore, a commodity strategist at Commonwealth Bank of Australia. “The near-term contracts are still very low and that reflects the fact we still have ample supplies at the moment.”

Crude oil for February delivery fell as much as 68 cents, or 1.7 percent, to $40.15 a barrel in after-hours electronic trading on the New York Mercantile Exchange. It was at $40.58 at 9:40 a.m. in Singapore.

OPEC, supplier of more than 40 percent of the world’s oil, agreed last month to cut production quotas by 9 percent to revive prices as the global recession erodes demand. Oil has plunged more than $100 in the last six months.

The group may cut its production further should crude prices continue to decline, Iran’s OPEC Governor Mohammad Ali Khatabi was cited as saying Jan. 11 by the Oil Ministry. OPEC is scheduled to meet next in Vienna on March 15. Iran is the group’s second-largest producer, after Saudi Arabia.

‘Steep Curve’

On Jan. 9, prices in New York dropped 2.1 percent to $40.83 a barrel after the U.S. said it lost 2.589 million jobs last year, the most since 1945.

Oil for March delivery is at a more than $5 a barrel premium to the front-month contract, while the April future is $9 above February delivered supplies. The situation where near-term crude is cheaper than later-dated oil is called a contango.

“The curve is very steep, which is consistent with the view that the market tightens up in time and we get higher prices down the track,” Commonwealth’s Moore said.

Oil for February dropped last week as stockpiles at Cushing, Oklahoma, the delivery point for crude traded at Nymex, climbed to 32.2 million barrels, the highest since the U.S. Energy Department started tracking the supplies in 2004. Total capacity in the area is around 47.7 million barrels, according to estimates from Andy Lipow at Houston-based consultants Lipow Oil Associates LLC.

Last week’s decline followed a 23 percent jump the week before, the most since August 1986.

Brent crude prices on Jan. 9 fell 0.6 percent to $44.42 a barrel on London’s ICE Futures Europe exchange.

U.S. Gasoline

The average price of regular gasoline at U.S. filling stations rose to $1.78 a gallon on speculation refinery maintenance may reduce stockpiles in the weeks ahead.

The motor fuel gained 12 cents, or 7.2 percent, in the three weeks ended Jan. 9, according to oil analyst Trilby Lundberg’s survey of 7,000 filling stations nationwide.

“This is simply a bounce after hitting bottom finally and it reflects a slight change in our demand behavior,” Lundberg said in a Bloomberg Radio interview yesterday. “Demand at these much lower prices is not down as much as it was in the fall although it is still down.”

To contact the reporters on this story: Angela Macdonald-Smith in Sydney at amacdonaldsm@bloomberg.net; Christian Schmollinger in Singapore at christian.s@bloomberg.net

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Asian Stocks Drop as U.S. Unemployment Jumps; Woodside Falls

By Shani Raja

Jan. 12 (Bloomberg) -- Asian stocks dropped for a third day, led by commodity producers, on concern an increase in U.S. unemployment signals a worsening global recession.

Woodside Petroleum Ltd. slipped 2 percent as crude oil fell for a fourth day. U.S. employers cut 524,000 positions in December, capping the worst year for firings since 1945. Rio Tinto Group slumped 5.5 percent after Deutsche Bank AG downgraded world’s third-biggest mining company to “hold” from “buy”. Hyundai Motor Co., South Korea’s biggest automaker, slid 1.1 percent after saying it plans to cut domestic production.

“The global economy is continuing to deteriorate,” said Rob Patterson, who manages about $2 billion at Argo Investments Ltd. in Adelaide. “If the U.S. economy is slowing, it means they’re importing less from countries like China, and that China is buying fewer commodities. It’s not helpful to anyone.”

The MSCI AC Asia Pacific excluding Japan Index fell 1.2 percent to 244.42 at 9:06 a.m. in Hong Kong, extending a two-day, 3.2 percent loss. All 10 industry groups declined. The index tumbled 53 percent in 2008, the biggest annual drop in its two- decade history.

Japan’s markets are closed for a holiday. Australia’s S&P/ASX 200 Index slipped 1.7 percent, while South Korea’s Kospi Index dropped 1.2 percent.

The Standard & Poor’s 500 Index sank 2.1 percent on Jan. 9, capping the worst week since November. The unemployment rate climbed to 7.2 percent in December, the Labor Department said, exceeding forecasts from economists polled by Bloomberg. The nation lost 2.589 million jobs last year, just shy of the 2.75 million drop at the end of World War II.

President-elect Barack Obama said in an ABC interview on the weekend that reviving the U.S. economy will require scaling back on his campaign promises and personal sacrifice from all Americans.

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

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Australia Stocks: Babcock, James Hardie, Rio, Santos, Woodside

By Shani Raja

Jan. 12 (Bloomberg) -- The S&P/ASX 200 Index fell 65.10, or 1.7 percent, to 3,670.60 at 10:33 a.m. in Sydney, the lowest since Dec. 30. The broader All Ordinaries Index declined 57.50 points, or 1.6 percent, to 3,622.90, while the futures contract expiring in March slipped 1.7 percent to 3,639.

U.S.-linked stocks: James Hardie Industries NV (JHX AU), the biggest seller of home siding in the U.S., slumped 15 cents, or 3.3 percent, to A$4.40, the lowest since Dec. 29. Westfield Group (WDC AU), which owns shopping malls in the U.S., fell 25 cents, or 1.8 percent, to A$13.56, the most since Dec. 19.

U.S. stocks declined on Friday, extending the market’s worst weekly slump since November, on concern an increase in the unemployment rate to an almost 16-year high signals the global recession is worsening. The S&P 500 lost 2.1 percent to 890.35.

Oil companies: Woodside Petroleum Ltd. (WPL AU) lost 75 cents, or 2.1 percent, to A$35.23, the lowest since Dec. 29. Santos Ltd. (STO AU) slipped 30 cents or 2.1 percent, to A$14.17.

Crude oil fell a fourth day after a report showing the U.S. unemployment rate surged in December raised concern demand will drop faster than OPEC cuts output. Crude oil for February delivery declined 2.1 percent to $40.83 a barrel at 2:44 p.m. in New York on Friday, the lowest settlement since Dec. 30.

Babcock & Brown Infrastructure Group (BBI AU), an Australian investment fund, tumbled 1.5 cents, or 12 percent, to 11.5 cents, the lowest since Jan. 5. The company said it may consider a sale of PD Ports Plc, operator of Britain’s third- biggest container dock.

Rio Tinto Group (RIO AU), the world’s third-biggest mining company, slumped A$2.09, or 4.8 percent, to A$41.84, the lowest since Jan. 2. The company was downgraded to “hold” from “buy’ at Deutsche Bank AG.

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

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Sales, Consumer Prices Probably Dropped: U.S. Economy Preview

By Bob Willis

Jan. 11 (Bloomberg) -- Sales at U.S. retailers probably fell in December for a sixth consecutive month as the recession headed into a second year, economists said before reports this week.

Purchases fell 1.2 percent last month, capping the longest stretch of declines since records began in 1992, according to the median estimate in a Bloomberg News survey. Other reports may show prices slumped, led by plummeting commodity costs, and manufacturing output slid.

Consumers are pulling back as unemployment surges and declining home and stock values squeeze household wealth, hurting retailers from Wal-Mart Stores Inc. to Macy’s Inc. The figures will serve as a reminder to lawmakers of the urgency to act on President-elect Barack Obama’s stimulus proposals to try to stem the decline in growth.

“Job insecurity is weighing heavily on consumers and causing them to cut back dramatically, even with energy prices lower,” said Dana Saporta, an economist at Dresdner Kleinwort in New York. “Retailers are responding to the weakness in spending by slashing prices.”

The Commerce Department’s retail sales report is due Jan. 14. Purchases fell 1.8 percent in November.

Same-store sales dropped 2.2 percent in the last two months of 2008, making it the worst holiday shopping season in almost four decades of record keeping, the International Council of Shopping Centers said last week. Some merchants forsook profits by trying to lure customers with discounts as deep as 70 percent. Wal-Mart, Macy’s and Gap Inc. all cut earnings forecasts.

Rising Unemployment

Americans are paring back as unemployment last month rose to 7.2 percent, the highest level in almost 16 years. Employers cut 524,000 workers in December, bringing losses last year to 2.6 million, the Labor Department said last week. Job losses are likely to continue for most of this year, economists said, even if stimulus measures are quickly enacted.

Obama, who takes office Jan. 20, is proposing a two-year recovery plan that includes about $300 billion in tax cuts for individuals and businesses and infrastructure spending aimed at creating or saving 3 million jobs.

“If nothing is done, this recession could linger for years,” Obama said last week as he sought to drum up support for the stimulus package, which may total $775 billion.

The U.S. economy shrank at a 0.5 percent annual pace from July through September as Americans reduced purchases at a 3.8 percent annual rate, the first decline in consumer spending since 1991 and the biggest in 28 years, the government said last month.

The economic slump probably worsened in the fourth quarter as declines in business investment and construction intensified and consumers continued to pull back.

Manufacturing Slump

As demand weakens, manufacturers are cutting back. Output at factories, mines and utilities probably fell 1 percent in December, the fourth decline in the last five months, according to the survey median before the Federal Reserve’s report on industrial production due on Jan. 16.

Automakers are leading the downturn in output. Car sales fell 36 percent in December, capping the industry’s worst year since 1992. General Motors Corp. and Chrysler LLC, which got emergency federal loans to help stay in business, have broadened incentive programs to boost sales.

Fed surveys from the New York and Philadelphia region are also forecast to show the manufacturing contraction was ongoing in January. Those reports are due Jan. 15.

Slumping growth in the U.S. and abroad is dragging down demand for commodities, causing prices to plummet. The Labor Department’s consumer-price index, due Jan. 16, is forecast to fall 0.9 percent for December, a third straight monthly decline, according to the survey.

Gasoline Slides

A decrease in the cost of gasoline probably paced the decline, economists said.

Energy prices have plunged from their peaks in July, when a barrel of crude oil cost $147. Oil ended last week near $41 a barrel on the New York Mercantile Exchange.

Labor Department reports on Jan. 14 and 15 are forecast to show import prices and wholesale costs also fell last month.

The trade gap probably shrank in November to the lowest level in four years, reflecting the collapse in imported oil costs. The gap narrowed to $51 billion from $57.2 billion on October, according to the survey median.

                         Bloomberg Survey

=================================================================
                       Release    Period    Prior     Median
Indicator                 Date               Value    Forecast
=================================================================
Trade Balance $ Blns      1/13      Nov.     -57.2     -51.0
Federal Budget $ Blns     1/13      Dec.      48.3     -83.0
Import Prices MOM%        1/14      Dec.     -6.7%     -5.3%
Import Prices YOY%        1/14      Dec.     -4.4%     -9.5%
Retail Sales MOM%         1/14      Dec.     -1.8%     -1.2%
Retail ex-autos MOM%      1/14      Dec.     -1.6%     -1.4%
Business Inv. MOM%        1/14      Nov.     -0.6%     -0.5%
PPI  MOM%                 1/15      Dec.     -2.2%     -2.0%
Core PPI MOM%             1/15      Dec.      0.1%      0.1%
PPI  YOY%                 1/15      Dec.      0.4%     -1.2%
Core PPI YOY%             1/15      Dec.      4.2%      4.2%
Initial Claims ,000’s     1/15     Jan. 3     467       500
Cont. Claims ,000’s       1/15    Dec. 27     4611      4610
Empire Manu. Index        1/15      Jan.     -25.8     -25.0
Philly Fed Index          1/15      Jan.     -36.1     -35.0
CPI  MOM%                 1/16      Dec.     -1.7%     -0.9%
Core CPI MOM%             1/16      Dec.      0.0%      0.1%
CPI  YOY%                 1/16      Dec.      1.1%     -0.2%
Core CPI YOY%             1/16      Dec.      2.0%      1.8%
Ind. Prod. MOM%           1/16      Dec.     -0.6%     -1.0%
Cap. Util. %              1/16      Dec.     75.4%     74.5%
U of Mich Conf. Index     1/16     Jan. P     60.1      59.0
=================================================================

To contact the reporter on this story: Bob Willis in Washington at bwillis@bloomberg.net

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Alinma Bank Net Was 390 Million Riyals From May 26 to Dec. 31

By Glen Carey

Jan. 11 (Bloomberg) -- Alinma Bank, the start-up Saudi Arabian Islamic bank that raised $2.8 billion in an April stock offering, reported a net income of 390 million riyals ($104 million) for the period from May 26 to Dec. 31.

The earnings per share for the period was 0.26 riyal, the bank said in a statement to the Saudi bourse Web site late yesterday.

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Aramex Is Unsure About Raising $200 Million on Credit Crisis

By Claudia Maedler

Jan. 11 (Bloomberg) -- Aramex PJSC, the Middle East’s biggest courier service company, said it is unsure about the ability to raise $200 million as it takes a “cautious approach” to acquisitions amid the global financial crisis.

Aramex is unable to make financial forecasts for 2009, the Dubai-based company said in a statement to the local bourse today.

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Persian Gulf Shares Retreat on Oil; Taqa Fall Most in Two Weeks

By Zainab Fattah

Jan. 11 (Bloomberg) -- Persian Gulf shares declined after crude oil fell a fourth day, raising concern lower oil prices may hurt government spending in the region.

Aramex PJSC dropped to its lowest in almost two weeks after it said it may not be able to raise as much money as previously stated for acquisitions. Abu Dhabi National Energy Co., the state- owned energy company that’s known as Taqa, slid the most in more than two weeks. National Bank of Kuwait SAK lost after al-Rai reported the bank may pay a lower dividend for 2008.

The Dubai Financial Market General Index lost 1.9 percent to 1,696.49 at 12:21 p.m. local time. The Abu Dhabi Securities Exchange Index decreased 0.8 percent, while the Kuwait Stock Exchange Index declined 1.4 percent, retreating for a third day.

“The drop in oil prices is adding to the prevailing bearish sentiment across Gulf markets,” Vyas Jayabhanu, head of Al Dhafra Financial Brokerage LLC, said in an interview today. “There are legitimate worries of a possible drop in government spending.”

Crude oil for February delivery fell 87 cents, or 2.1 percent, to $40.83 a barrel on the New York Mercantile Exchange on Jan. 9, the lowest settlement in 2009. Oil dropped 12 percent last week after gaining 23 percent the week before.

Saudi’s Index Gains

Aramex PJSC lost 3.3 percent to 0.88 dirham, heading for its lowest close since Dec. 31. The Middle East’s biggest courier service company said it’s not sure about its ability to raise $200 million for acquisitions after banks tightened lending because of the global financial crisis.

Taqa slid 5.1 percent to 1.11 dirhams, its biggest drop since Dec. 24.

National Bank of Kuwait declined 1.7 percent to 1,160 fils. The country’s largest lender may pay a cash dividend of 60 fils or less, following guidance from the Central Bank of Kuwait, al-Rai reported, without citing anyone. The bank was prepared to pay 70 fils a share, the newspaper said.

Saudi Arabia’s Tadawul All Share Index added 0.1 percent. Oman’s Muscat Securities Market 30 Index rose 0.9 percent, while the Bahrain All Share Index decreased 0.5 percent. Qatar’s Doha Securities Market Index lost 1 percent.

To contact the reporter on this story: Zainab Fattah in Dubai on zfattah@bloomberg.net

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Safco Quarterly Profit Falls on Lower Chemical Prices

By Glen Carey

Jan. 11 (Bloomberg) -- Saudi Arabian Fertilizer Co., a unit of Saudi Basic Industries Corp., posted its first decline in quarterly profit in more than two years as fertilizer prices dropped because of the global financial crisis.

Net income for the fourth-quarter fell 28 percent to 536 million riyals ($142.9 million) from 742 million riyals in the year-earlier period, the Dammam, Saudi Arabia-based company said in a statement today on the Saudi bourse Web site. Earnings per share for the quarter weren’t provided.

The worst financial crisis since the Great Depression has weakened global demand for petrochemicals and fertilizers produced by Saudi Arabian companies, including Saudi Basic, the largest chemicals maker in the world by market value.

“Safco’s margins are getting hit because we have seen the prices of petrochemical and fertilizers declining,” Faisal Hasan, head of research at Global Investment House KSCC, said in a telephone interview from Kuwait today. “In the petrochemical and plastic segments, we have seen a decline in demand. This will have an impact on Saudi companies that rely on international markets for their sales.”

Demand Decline

Global prices for major farm inputs such as crop nutrients have fallen between 60 percent and 75 percent from records reached in mid-2008, Rabobank Groep NV, the world’s largest lender to farmers, said Jan. 7. Fertilizer-makers globally, including Yara International ASA, the world’s largest, Mosaic Co. and Agrium Inc. are trimming output amid rising inventories as farmers delay purchases on expectations fertilizer prices will fall.

Global Investment, which has a “hold” recommendation and a price estimate of 252.5 riyals for Safco, had forecast quarterly net income of 1.104 billion riyals for the company. Credit Suisse Group AG has a “neutral” recommendation and a price estimate of 110.93 riyals for the fertilizer maker.

Safco, which is 43 percent owned by Saudi Basic, doubled its production capacity to 5 million tons after an expansion in April 2007. It produces 66 percent of the kingdom’s fertilizers, according to a Global Investment report on Safco in June. At the end of 2007, Saudi Arabia had fertilizer production capacity of 6.8 million tons, accounting for 25 percent of the Middle East’s total capacity, according to Global Investment.

Safco’s shares declined 6.4 percent to 94.5 riyals in trading yesterday in Riyadh, valuing the company at 23.6 billion riyals. The stock has risen 5.3 percent this year after dropping 43 percent last year.

To contact the reporter on this story: Glen Carey in Dubai at gcarey8@bloomberg.net

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Hino to Debut Hybrid Truck Twice as Fuel Efficient, Nikkei Says

By Patrick Rial

Jan. 11 (Bloomberg) -- Hino Motors Ltd. plans to sell a gas- electric truck next year offering twice the fuel efficiency of its current hybrids and 2 1/2 times that of the company’s conventional engines, the Nikkei newspaper said.

Hino, Japan’s biggest maker of heavy-duty trucks, will market the vehicles in Japan, the U.S. and Australia, according to the report. The company is using the same hybrid technology as parent Toyota Motor Corp. to cut costs, Nikkei said. Hino is installing larger batteries and improving the motor to achieve greater fuel efficiency, the report said.

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

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Canon’s Mitarai Calls Holiday Sales, Outlook Weak, Reuters Says

By Patrick Rial

Jan. 11 (Bloomberg) -- Canon Inc.’s 2008 holiday sales were “disappointing” and the world’s largest maker of digital cameras expects 2009 to be its “worst year,” Chairman Fujio Mitarai said, according to a Reuters report.

“This year must be the worst” for camera sales and the economy, Mitarai said, speaking in Seoul, South Korea, according to the report. Mitarai is also chairman of Keidanren, Japan’s largest business lobby.

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

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Japan’s Aso Urges Stronger South Korea Ties to Overcome Crisis

By Kevin Cho and Heejin Koo

Jan. 11 (Bloomberg) -- Japanese Prime Minister Taro Aso urged closer cooperation between Japan and South Korea to help overcome the current economic crisis.

“Our two countries should bring out their strengths through close cooperation,” Aso said at a luncheon arranged by South Korea’s four major business lobbies in Seoul today. “Economic partnership between Japan and South Korea expands opportunities for collaboration in Asia. A win-win situation for both countries will help overcome the crisis.”

Japan and South Korea are seeking closer economic ties to spur growth amid the global recession. Japan’s economy shrank 2.85 percent in the three months ended Dec. 31, contracting for a third straight quarter, according to a Bloomberg survey of economists. The Bank of Korea cut its benchmark interest rate by a half point to a record low on Jan. 9, saying the economy is deteriorating faster than expected.

Aso, on a two-day visit to Seoul, will meet South Korean President Lee Myung Bak tomorrow at the presidential Blue House.

“We hope South Korea and Japan will work together to overcome the current difficulties,” said S.R. Cho, chairman of the Federation of Korean Industries. “It’s essential for the Asian economy that the two nations cooperate.”

Aso announced a stimulus package of 10 trillion yen ($110 billion) on Dec. 12, doubling a 5 trillion yen plan he proposed two months earlier. South Korea’s government has allocated about 140 trillion won in extra liquidity, tax cuts and spending to avert the nation’s first recession since the Asian financial meltdown a decade ago.

Asia’s fourth-largest economy may worsen more than the government had anticipated at the end of last year, Lee said on Jan. 9. Lee said last month the economy, which grew at the slowest pace in four years in the third quarter, may shrink in the first half of this year, its first recession since 1998.

South Korea and Japan agreed last month to increase a currency swap arrangement to $20 billion from $3 billion. The won has gained 11 percent since reaching its decade low versus the dollar on Nov. 21.

To contact the reporter on this story: Kevin Cho in Seoul at kcho2@bloomberg.net; Heejin Koo in Seoul at hjkoo@bloomberg.net

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Parekh to Run Satyam as Chairman Held in Fraud Probe

By M.C. Govardhana Rangan and Gaurav Singh

Jan. 11 (Bloomberg) -- Deepak Parekh, chairman of Housing Development Finance Corp., and two directors were appointed to run Satyam Computer Services Ltd. as India detained the software company’s founder in the nation’s biggest corporate fraud.

“First we need to go and assess the magnitude of the issue,” Parekh told Bloomberg in a telephone interview. “Then we have to work on the re-statement of accounts.”

Kiran Karnik, ex-president of the nation’s software industry lobby group, and former regulator C. Achuthan were also appointed to Satyam’s board, Corporate Affairs Minister Prem Chand Gupta said in New Delhi today. The previous directors were sacked on Jan. 9 when chairman Ramalinga Raju was arrested.

The new management will work to retain Hyderabad-based Satyam’s customers including Telstra Corp. and safeguard 53,000 jobs. Satyam was sued by investors in at least three class-action lawsuits in the U.S. following the plunge in its shares after Raju said he falsified accounts for several years.

“The board’s first priority will clearly be to restore the company’s credibility, customer confidence and employee morale, as also to safeguard the interests of investors and other stakeholders,” Gupta said. “I’m confident these persons will be able to give the kind of leadership to the company which is required.”

Forgery, Conspiracy

A Hyderabad magistrate yesterday remanded Raju, Satyam’s founder, and his brother Rama to judicial custody until Jan. 23. Satyam Chief Financial Officer Srinivas Vadlamani was questioned by police yesterday and subsequently arrested, Inspector General V.S.K. Kaumudi said.

The brothers were detained on charges including forgery, breach of trust and criminal conspiracy, Kaumudi said on Jan. 9. Officials have seized documents and the nation’s accounting body is examining auditor PricewaterhouseCoopers LLC’s local unit, Gupta said on Jan. 9.

Raju’s admission on Jan. 7 that he’d fabricated $1 billion in cash and assets on Satyam’s books sparked a 95 percent, two- day plunge in the company’s stock that wiped out $2.2 billion of investor wealth. The company is now worth $332 million after the Bombay Stock Exchange removed Satyam from its Sensitive Index and the National Stock Exchange dropped the stock from the Nifty.

Satyam shareholder Lazard Asset Management LLC said it asked for information from the government about developments in the investigation.

“As a large shareholder, we would like to be informed on all matters being considered regarding Satyam,” Lazard Asset said in a letter to the Ministry of Corporate Affairs, according to a statement today on BusinessWire. It said reports that it has sought a seat on the Satyam board are incorrect.

Increased Stake

Lazard Asset increased its stake in Satyam on Jan. 7 to 5.3 percent from 4.79 percent, while Aberdeen Asset Managers Ltd. and Fidelity Management & Research Co. sold their holdings. Lazard holds shares on behalf of clients and the acquisition of an additional stake wasn’t aimed at getting control of the company, it said in a filing yesterday.

Satyam’s American depositary receipts, each representing two ordinary Satyam shares, fell $8.42, or 90 percent, to 93 cents before the opening of the New York Stock Exchange on Jan. 7, when trading was halted.

“Shareholders are worried since the government got involved,” P.R. Dilip, managing director at investment advisory firm Impetus Wealth Management Ltd. in Mumbai, said before the three directors were named. “The priority will be to rescue staff and customers, and shareholders are always last in the queue in these kinds of events.”

Parekh said he’d work to restore confidence of Satyam’s employees and clients. Satyam’s board is expected to convene within the next 24 hours in Hyderabad and further appointments may be made later, Gupta said.

Raju’s Fall

The fall of Raju, named Ernst & Young Entrepreneur of the Year in 2007, began three weeks ago when Satyam proposed paying $1.6 billion for Maytas Properties Ltd. and Maytas Infra Ltd., both tied to his family. The plan was scrapped 12 hours later after investors called it a “woeful misuse of cash.” Raju said the sale was designed to plug the hole in Satyam’s balance sheet.

Satyam has offices from the U.S. to the U.K., Brazil and Australia. The company writes software and manages computer systems for clients including ArcelorMittal, the world’s largest steelmaker, and Nissan Motor Co., Japan’s third-biggest carmaker.

Telstra, Australia’s largest telephone company, said Jan. 8 that Satyam’s disclosure will be a factor when it cuts two out of its four major information technology suppliers this year.

“A company without a board is like a headless chicken,” Karnik, former president of the National Association of Software and Service Companies, told Bloomberg yesterday before his appointment. “Satyam needs people with credibility, integrity to retain customers and employees. You also need legal protection for those who come on board from future lawsuits.”

To contact the reporters on this story: Gaurav Singh in New Delhi at gsingh31@bloomberg.net; M.C. Govardhana Rangan in Mumbai at grangan@bloomberg.net.

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Parekh to Run Satyam as Chairman Held in Fraud Probe

By M.C. Govardhana Rangan and Gaurav Singh

Jan. 11 (Bloomberg) -- Deepak Parekh, chairman of Housing Development Finance Corp., and two directors were appointed to run Satyam Computer Services Ltd. as India detained the software company’s founder in the nation’s biggest corporate fraud.

“First we need to go and assess the magnitude of the issue,” Parekh told Bloomberg in a telephone interview. “Then we have to work on the re-statement of accounts.”

Kiran Karnik, ex-president of the nation’s software industry lobby group, and former regulator C. Achuthan were also appointed to Satyam’s board, Corporate Affairs Minister Prem Chand Gupta said in New Delhi today. The previous directors were sacked on Jan. 9 when chairman Ramalinga Raju was arrested.

The new management will work to retain Hyderabad-based Satyam’s customers including Telstra Corp. and safeguard 53,000 jobs. Satyam was sued by investors in at least three class-action lawsuits in the U.S. following the plunge in its shares after Raju said he falsified accounts for several years.

“The board’s first priority will clearly be to restore the company’s credibility, customer confidence and employee morale, as also to safeguard the interests of investors and other stakeholders,” Gupta said. “I’m confident these persons will be able to give the kind of leadership to the company which is required.”

Forgery, Conspiracy

A Hyderabad magistrate yesterday remanded Raju, Satyam’s founder, and his brother Rama to judicial custody until Jan. 23. Satyam Chief Financial Officer Srinivas Vadlamani was questioned by police yesterday and subsequently arrested, Inspector General V.S.K. Kaumudi said.

The brothers were detained on charges including forgery, breach of trust and criminal conspiracy, Kaumudi said on Jan. 9. Officials have seized documents and the nation’s accounting body is examining auditor PricewaterhouseCoopers LLC’s local unit, Gupta said on Jan. 9.

Raju’s admission on Jan. 7 that he’d fabricated $1 billion in cash and assets on Satyam’s books sparked a 95 percent, two- day plunge in the company’s stock that wiped out $2.2 billion of investor wealth. The company is now worth $332 million after the Bombay Stock Exchange removed Satyam from its Sensitive Index and the National Stock Exchange dropped the stock from the Nifty.

Satyam shareholder Lazard Asset Management LLC said it asked for information from the government about developments in the investigation.

“As a large shareholder, we would like to be informed on all matters being considered regarding Satyam,” Lazard Asset said in a letter to the Ministry of Corporate Affairs, according to a statement today on BusinessWire. It said reports that it has sought a seat on the Satyam board are incorrect.

Increased Stake

Lazard Asset increased its stake in Satyam on Jan. 7 to 5.3 percent from 4.79 percent, while Aberdeen Asset Managers Ltd. and Fidelity Management & Research Co. sold their holdings. Lazard holds shares on behalf of clients and the acquisition of an additional stake wasn’t aimed at getting control of the company, it said in a filing yesterday.

Satyam’s American depositary receipts, each representing two ordinary Satyam shares, fell $8.42, or 90 percent, to 93 cents before the opening of the New York Stock Exchange on Jan. 7, when trading was halted.

“Shareholders are worried since the government got involved,” P.R. Dilip, managing director at investment advisory firm Impetus Wealth Management Ltd. in Mumbai, said before the three directors were named. “The priority will be to rescue staff and customers, and shareholders are always last in the queue in these kinds of events.”

Parekh said he’d work to restore confidence of Satyam’s employees and clients. Satyam’s board is expected to convene within the next 24 hours in Hyderabad and further appointments may be made later, Gupta said.

Raju’s Fall

The fall of Raju, named Ernst & Young Entrepreneur of the Year in 2007, began three weeks ago when Satyam proposed paying $1.6 billion for Maytas Properties Ltd. and Maytas Infra Ltd., both tied to his family. The plan was scrapped 12 hours later after investors called it a “woeful misuse of cash.” Raju said the sale was designed to plug the hole in Satyam’s balance sheet.

Satyam has offices from the U.S. to the U.K., Brazil and Australia. The company writes software and manages computer systems for clients including ArcelorMittal, the world’s largest steelmaker, and Nissan Motor Co., Japan’s third-biggest carmaker.

Telstra, Australia’s largest telephone company, said Jan. 8 that Satyam’s disclosure will be a factor when it cuts two out of its four major information technology suppliers this year.

“A company without a board is like a headless chicken,” Karnik, former president of the National Association of Software and Service Companies, told Bloomberg yesterday before his appointment. “Satyam needs people with credibility, integrity to retain customers and employees. You also need legal protection for those who come on board from future lawsuits.”

To contact the reporters on this story: Gaurav Singh in New Delhi at gsingh31@bloomberg.net; M.C. Govardhana Rangan in Mumbai at grangan@bloomberg.net.

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Ukraine Signs Accord on Transit Gas With EU, Russia

By Daryna Krasnolutska and Lucian Kim

Jan. 11 (Bloomberg) -- Ukraine signed an accord with Russia and the European Union on monitoring transit gas through its territory, setting the stage for the resumption of supplies to Europe after four days of disruption amid freezing temperatures.

Czech Prime Minister Mirek Topolanek, who represents the EU, secured the agreement of Ukrainian Prime Minister Yulia Timoshenko in Kiev, after talks with Russian Prime Minister Vladimir Putin yesterday at his residence outside Moscow.

The gas shutdown, triggered by Russia’s dispute with Ukraine over prices and debt, renewed calls in Europe to develop nuclear power and alternative sources of energy. Fuel supplies are dwindling as temperatures as low as minus 15 degrees Celsius (5 degrees Fahrenheit) in the Balkans spur energy demand.

“In some eastern European countries people are sitting there without heating,” said Bernhard Jeggle, an analyst at Landesbank Baden-Wuerttemberg in Stuttgart. “They’re in a pretty tough situation, but that should be over soon.”

The accord was signed yesterday in Moscow by Russian Deputy Prime Minister Igor Sechin, OAO Gazprom Chief Executive Officer Alexei Miller and Czech Trade Minister Martin Riman, according to Russian state broadcaster Vesti-24.

“Ukraine signed the protocol so that Ukraine is not a barrier for Russia to resume gas deliveries to the European Union,” Timoshenko told reporters. Topolanek said Ukraine had met all conditions for Russia to resume gas shipments.

Shuttle Diplomacy

Russia, Ukraine and the EU struck an accord in principle Jan. 8 on monitoring flows of the fuel, paving the way for the resumption of deliveries to the 27-nation bloc. Since then the deal has been held up by disputes on how to deploy monitors.

Earlier yesterday Topolanek said the Ukrainian leadership gave him verbal assurances that Russian experts will be allowed to monitor transit shipments in Ukraine, according to Vesti. At the same time, international monitors will check flows into the Ukrainian pipeline network from Russian territory, he said.

His role as EU mediator is reminiscent of French President Nicolas Sarkozy’s shuttle diplomacy between Moscow and Tbilisi during Russia’s invasion of Georgia in August. France, which held the EU presidency at the time, was instrumental in ending the five-day war.

Ukraine and Georgia, both former Soviet republics, have strained relations with Russia in their efforts to join the European Union and the North Atlantic Treaty Organization.

Gas Prices

Natural-gas prices in the U.K., Europe’s largest market, initially fell this week on speculation gas could soon be flowing again through Ukraine after EU officials brokered a deal. Gazprom halted transit flows on Jan. 7 after accusing Ukraine of diverting gas intended for other buyers for its own use, a charge denied by the country. Russian supplies to Ukraine itself were suspended Jan. 1 pending a new contract.

European Commission President Jose Barroso “warmly” welcomed the accord today. “We now need the gas to flow immediately to the EU,” Barroso said in an e-mailed statement released jointly with EU Energy Commissioner Andris Piebalgs. They said the monitoring teams “will start to do their work as soon as possible.”

A group of 17 EU monitors arrived in Ukraine and a further five were on their way to Moscow, the European Commission said in an e-mailed statement. Two Commission officials were included in the team sent to each country, while the remaining members were experts supplied by European gas companies.

Monitoring Teams

In Ukraine the monitors were dividing into five teams, two of which would travel to the eastern border where the gas arrives near Sumy and Novopskov, two to the western border where it exits near Uzhhorod and one to a dispatching center to coordinate information.

Gazprom is ready to start work resuming gas shipments to European customers via Ukraine as soon as it has confirmation of the accord’s signature, Miller said in a statement yesterday. He said the company had planes waiting to fly experts to the pumping stations. It would first send minimum volumes needed, mainly to Balkan countries, and increase the amount quickly once it was sure Ukraine was not siphoning any fuel.

Once Russia resumes shipments, it will take 36 hours for the gas to start reaching European consumers. Supplies to at least 20 nations have been affected.

Gazprom’s European customers receive 80 percent of supplies through pipelines that cross Ukraine. The Russian exporter, which provides a quarter of Europe’s gas, said its overall deliveries to Europe were cut by about 60 percent on Jan. 7.

European Supplies

Bulgaria, Hungary and Slovakia were among eastern European countries that maintained curbs on gas use on Jan. 9. Most countries in western Europe have suffered less from the cutoff, tapping stockpiles and alternative supplies to meet demand.

Temperatures were forecast to fall as low as minus 11 degrees Celsius in Zagreb and minus 15 degrees Celsius in Sofia this weekend, according to AccuWeather.com.

NAK Naftogaz Ukrainy Chief Executive Officer Oleh Dubina returned to Kiev yesterday from Moscow after three days of talks on his country’s dispute with Russia on the price Russian wants to charge for 2009 gas deliveries to Ukraine.

“Russia offered us $450 per 1,000 cubic meters, a rate which doesn’t correspond to a European price, and a rate which we cannot accept,” Dubina said in a statement posted on the government’s web site. There is no plan for Dubina to return to Moscow and Naftogaz said “further talks should be conducted by top politicians.”

Ukraine paid Russia $179.50 per 1,000 cubic meters for gas last year.

Energy Alternatives

The dispute, over transit fees and debt as well as the gas price, has come as Ukraine’s leaders, Timoshenko and President Viktor Yushchenko, are facing a financial crisis that has forced them to seek a $16.4 billion International Monetary Fund bailout.

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

The Slovak government yesterday approved the restart of a nuclear reactor, in the face of opposition from the European Union, to meet the country’s energy needs as the halt in Russian gas supplies continued.

Prime Minister Robert Fico told reporters the move would be for a “necessary” period until the gas market stabilizes. The reactor in Jaslovske Bohunice was closed Dec. 31 as part of the conditions imposed on Slovakia when it joined the EU.

The Polish government will also decide next week on building nuclear power plants in Poland, according to Tomasz Misiak, a member of Poland’s ruling party Citizens’ Platform and chairman of Senate’s economy committee.

To contact the reporters on this story: Lucian Kim in Moscow on lkim3@bloomberg.net; Daryna Krasnolutska in Kiev on dkrasnolutsk@bloomberg.net

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Russian Stocks Climb, Led by Rosneft, Lukoil After Rally in Oil

By William Mauldin

Jan. 11 (Bloomberg) -- Russian stocks climbed in the first day of trading this year, led by oil producers OAO Rosneft and OAO Lukoil after crude advanced.

The 30-stock Micex Index added 2.6 percent to 635.70 at 10:33 a.m. after dropping 67 percent last year. The RTS Index rose 1.5 percent to 641.45.

Russia’s Urals blend of crude climbed to $43.23 a barrel on Jan. 9, compared with $36.24 a barrel on Dec. 30, the last full day that Moscow stock exchanges were open. Brent crude rose 11 percent to $44.42 a barrel during that period.

The dollar-denominated Russian Depositary Index, a measure of Russian global depositary receipts trading in London, has advanced 6.6 percent this year while Moscow exchanges were closed.

State-run Rosneft advanced 2.11 rubles, or 1.9 percent, to 112.40 rubles on the Micex Stock Exchange. Lukoil retreated 38.51 rubles, or 4 percent, to 1,000.11 rubles.

To contact the reporter on this story: William Mauldin in Moscow at wmauldin1@bloomberg.net.

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Ukraine Signs Accord on Transit Gas With EU, Russia

By Daryna Krasnolutska and Lucian Kim

Jan. 11 (Bloomberg) -- Ukraine signed an accord with Russia and the European Union on monitoring transit gas through its territory, setting the stage for the resumption of supplies to Europe after four days of disruption amid freezing temperatures.

Czech Prime Minister Mirek Topolanek, who represents the EU, secured the agreement of Ukrainian Prime Minister Yulia Timoshenko in Kiev, after talks with Russian Prime Minister Vladimir Putin yesterday at his residence outside Moscow.

The gas shutdown, triggered by Russia’s dispute with Ukraine over prices and debt, renewed calls in Europe to develop nuclear power and alternative sources of energy. Fuel supplies are dwindling as temperatures as low as minus 15 degrees Celsius (5 degrees Fahrenheit) in the Balkans spur energy demand.

“In some eastern European countries people are sitting there without heating,” said Bernhard Jeggle, an analyst at Landesbank Baden-Wuerttemberg in Stuttgart. “They’re in a pretty tough situation, but that should be over soon.”

The accord was signed yesterday in Moscow by Russian Deputy Prime Minister Igor Sechin, OAO Gazprom Chief Executive Officer Alexei Miller and Czech Trade Minister Martin Riman, according to Russian state broadcaster Vesti-24.

“Ukraine signed the protocol so that Ukraine is not a barrier for Russia to resume gas deliveries to the European Union,” Timoshenko told reporters. Topolanek said Ukraine had met all conditions for Russia to resume gas shipments.

Shuttle Diplomacy

Russia, Ukraine and the EU struck an accord in principle Jan. 8 on monitoring flows of the fuel, paving the way for the resumption of deliveries to the 27-nation bloc. Since then the deal has been held up by disputes on how to deploy monitors.

Earlier yesterday Topolanek said the Ukrainian leadership gave him verbal assurances that Russian experts will be allowed to monitor transit shipments in Ukraine, according to Vesti. At the same time, international monitors will check flows into the Ukrainian pipeline network from Russian territory, he said.

His role as EU mediator is reminiscent of French President Nicolas Sarkozy’s shuttle diplomacy between Moscow and Tbilisi during Russia’s invasion of Georgia in August. France, which held the EU presidency at the time, was instrumental in ending the five-day war.

Ukraine and Georgia, both former Soviet republics, have strained relations with Russia in their efforts to join the European Union and the North Atlantic Treaty Organization.

Gas Prices

Natural-gas prices in the U.K., Europe’s largest market, initially fell this week on speculation gas could soon be flowing again through Ukraine after EU officials brokered a deal. Gazprom halted transit flows on Jan. 7 after accusing Ukraine of diverting gas intended for other buyers for its own use, a charge denied by the country. Russian supplies to Ukraine itself were suspended Jan. 1 pending a new contract.

European Commission President Jose Barroso “warmly” welcomed the accord today. “We now need the gas to flow immediately to the EU,” Barroso said in an e-mailed statement released jointly with EU Energy Commissioner Andris Piebalgs. They said the monitoring teams “will start to do their work as soon as possible.”

A group of 17 EU monitors arrived in Ukraine and a further five were on their way to Moscow, the European Commission said in an e-mailed statement. Two Commission officials were included in the team sent to each country, while the remaining members were experts supplied by European gas companies.

Monitoring Teams

In Ukraine the monitors were dividing into five teams, two of which would travel to the eastern border where the gas arrives near Sumy and Novopskov, two to the western border where it exits near Uzhhorod and one to a dispatching center to coordinate information.

Gazprom is ready to start work resuming gas shipments to European customers via Ukraine as soon as it has confirmation of the accord’s signature, Miller said in a statement yesterday. He said the company had planes waiting to fly experts to the pumping stations. It would first send minimum volumes needed, mainly to Balkan countries, and increase the amount quickly once it was sure Ukraine was not siphoning any fuel.

Once Russia resumes shipments, it will take 36 hours for the gas to start reaching European consumers. Supplies to at least 20 nations have been affected.

Gazprom’s European customers receive 80 percent of supplies through pipelines that cross Ukraine. The Russian exporter, which provides a quarter of Europe’s gas, said its overall deliveries to Europe were cut by about 60 percent on Jan. 7.

European Supplies

Bulgaria, Hungary and Slovakia were among eastern European countries that maintained curbs on gas use on Jan. 9. Most countries in western Europe have suffered less from the cutoff, tapping stockpiles and alternative supplies to meet demand.

Temperatures were forecast to fall as low as minus 11 degrees Celsius in Zagreb and minus 15 degrees Celsius in Sofia this weekend, according to AccuWeather.com.

NAK Naftogaz Ukrainy Chief Executive Officer Oleh Dubina returned to Kiev yesterday from Moscow after three days of talks on his country’s dispute with Russia on the price Russian wants to charge for 2009 gas deliveries to Ukraine.

“Russia offered us $450 per 1,000 cubic meters, a rate which doesn’t correspond to a European price, and a rate which we cannot accept,” Dubina said in a statement posted on the government’s web site. There is no plan for Dubina to return to Moscow and Naftogaz said “further talks should be conducted by top politicians.”

Ukraine paid Russia $179.50 per 1,000 cubic meters for gas last year.

Energy Alternatives

The dispute, over transit fees and debt as well as the gas price, has come as Ukraine’s leaders, Timoshenko and President Viktor Yushchenko, are facing a financial crisis that has forced them to seek a $16.4 billion International Monetary Fund bailout.

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

The Slovak government yesterday approved the restart of a nuclear reactor, in the face of opposition from the European Union, to meet the country’s energy needs as the halt in Russian gas supplies continued.

Prime Minister Robert Fico told reporters the move would be for a “necessary” period until the gas market stabilizes. The reactor in Jaslovske Bohunice was closed Dec. 31 as part of the conditions imposed on Slovakia when it joined the EU.

The Polish government will also decide next week on building nuclear power plants in Poland, according to Tomasz Misiak, a member of Poland’s ruling party Citizens’ Platform and chairman of Senate’s economy committee.

To contact the reporters on this story: Lucian Kim in Moscow on lkim3@bloomberg.net; Daryna Krasnolutska in Kiev on dkrasnolutsk@bloomberg.net

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Singapore Expects ‘Challenging Year’ for Tourism

By Simeon Bennett and Chen Shiyin

Jan. 11 (Bloomberg) -- Singapore expects a “challenging year” for tourism in 2009 as the global economic recession curtails consumer spending and holiday plans.

Tourist arrivals fell 2 percent last year to 10.1 million visitors, even as receipts rose 5 percent to a record S$14.8 billion ($10 billion), the Singapore Tourism Board said in an e- mailed statement yesterday. Both figures missed the government’s targets of 10.8 million visitors and S$15.5 billion in receipts. Hotel occupancy rates slid 5.7 percentage points to 82 percent.

Singapore’s government is planning a marketing campaign aimed at other Asian nations, and is providing financial assistance to “help businesses ride out the slowdown,” it said. Still, arrivals may slump as much as 7.5 percent this year, David Cohen, director of Asian forecasting at Action Economics in Singapore, said today in a telephone interview.

“It will continue soft for at least a few more months,” Cohen said. “The hope is that the global situation would bottom out around the middle of the year on support from all the stimulus measures being implemented around the world.”

The decline in tourism spending will compound a recession in the export-dependent nation. Singapore’s economy may contract as much as 2 percent this year, after declining for three straight quarters, the trade ministry said Jan. 2.

Car Races, Casinos

A slump in visitor arrivals this year may hurt a bid to lure 17 million visitors to Singapore and triple tourism revenue to S$30 billion by 2015. The city-state last year staged its first Formula One race and is building two resorts that include casinos, and the only Universal Studios theme park in Southeast Asia.

“Given the continuing volatility of the global economic climate, we expect 2009 to be a challenging year,” the tourism board said in the statement. “Despite this, the mid to long-term potential for tourism, particularly in the Asian economies, remains bright.”

Global tourism will be “flat or marginal at best” this year, the World Tourism Organization said in October.

To contact the reporters on this story: Simeon Bennett in Singapore at sbennett9@bloomberg.net; Chen Shiyin in Singapore at schen37@bloomberg.net.

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Lazard Asset Seeks Information in Satyam Rescue Plan

By M.C. Govardhana Rangan

Jan. 11 (Bloomberg) -- Lazard Asset Management LLC, a stakeholder in Satyam Computer Services Ltd., said it wants information from the Indian government about developments in the investigation of a $1 billion fraud at the company.

“As a large shareholder, we would like to be informed on all matters being considered regarding Satyam,” Lazard Asset said in a letter to the Ministry of Corporate Affairs, according to a statement today on BusinessWire. It said reports that it has sought a seat on the Satyam board are incorrect.

Lazard Asset increased its stake in India’s fourth-biggest software exporter as investors sold after Chairman Ramalinga Raju said he had falsified accounts “for several years.” The government sacked directors of Hyderabad-based Satyam and is assembling a board that’s scheduled to meet this week.

“Shareholders are worried since the government got involved,” said P.R. Dilip, managing director at investment advisory firm Impetus Wealth Management Ltd. in Mumbai. “The priority will be to rescue staff and customers, and shareholders are always last in the queue in these kinds of events.”

A Hyderabad magistrate yesterday remanded Raju, Satyam’s founder, and his brother Rama to judicial custody until Jan. 23. Satyam Chief Financial Officer Srinivas Vadlamani was questioned by police yesterday.

Changing Hands

Lazard Asset increased its stake in Satyam on Jan. 7 to 5.3 percent from 4.79 percent, while Aberdeen Asset Managers Ltd. and Fidelity Management & Research Co. sold their holdings. Lazard holds shares on behalf of clients and the acquisition of an additional stake wasn’t aimed at getting control of the company, it said in a filing to the Bombay Stock Exchange yesterday.

Aberdeen Asset Managers, the biggest shareholder as of Sept. 30, sold 36.14 million shares, or about 5.4 percent of Satyam’s outstanding equity, on Jan. 7, data from stock exchanges show.

Satyam Computer was sued by investors in at least three class-action lawsuits in federal court in the U.S. following the plunge in its shares after Raju, 54, revealed the fraud and quit.

The stock plummeted 41 percent to 23.75 rupees on Jan. 9. The Bombay Stock Exchange removed Satyam from its benchmark Sensitive Index a day after the National Stock Exchange dropped the stock from the Nifty.

Satyam’s American depositary receipts, each representing two ordinary Satyam shares, fell $8.42, or 90 percent, to 93 cents before the opening of the New York Stock Exchange on Jan. 7, when trading was halted.

To contact the reporter on this story: M.C. Govardhana Rangan in Mumbai at grangan@bloomberg.net.

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