Axa, Lafarge, PSA Peugeot, Risc, Wendel: French Stocks Preview

By Rudy Ruitenberg

Feb. 20 (Bloomberg) -- The following is a list of companies whose stocks may have unusual changes in Paris. Symbols are in parentheses after company names and prices are from the last close.

France’s CAC 40 Index slid 1.47 points, or less than 0.1 percent, to 2,872.60. The SBF 120 Index also dropped less than 0.1 percent.

Arkema SA (AKE FP): The chemicals maker won a long-term contract to supply hydrochlorofluorocarbon to Dyneon. It didn’t give financial details. The shares lost 7 cents, or 0.6 percent, to 10.97 euros.

Axa SA (CS FP): Europe’s second-largest insurer had its credit rating outlook revised to negative from stable by Standard & Poor’s, citing a possible drop in earnings at the group’s life insurance and asset management units. At the same time, S&P affirmed Axa’s AA financial strength and long-term counterparty credit ratings. The shares lost 1.02 euros, or 9.1 percent, to 10.15 euros.

Cesar SA (CSAR FP): The costume maker reported a first-half loss of 24.4 million euros, compared with a year-earlier profit of 3.82 million euros and forecast second-half earnings will be down from year-earlier levels. The shares fell 1 cent, or 2.3 percent, to 42 cents.

Lafarge SA (LG FP): The world’s biggest cement maker reports earnings before the market opens in Paris. The shares gained 17 cents, or 0.5 percent, to 36.82 euros.

Lisi SA (FII FP): The maker of bolts, rivets and clips for cars and airplanes reported a 17 percent drop in 2008 net income to 56.2 million euros and said visibility on 2009 earnings is “limited.” The shares fell 20 cents, or 0.8 percent, to 25.50 euros.

PSA Peugeot Citroen (UG FP): Europe’s second-largest carmaker’s long- and short-term credit ratings were cut to the lowest investment grade by Moody’s Investors Service, citing a decline in operating performance. The shares gained 25 cents, or 1.7 percent, to 14.59 euros.

Risc Group (RSC FP): The distributor of information technology products said first-half revenue rose to 39.8 million euros from 31.1 million euros a year earlier, and cut its full- year sales target to between 90 million and 94 million euros, from 108 million euros previously. The shares closed unchanged at 38 cents.

Suez Environnement SA (SEV FP): Europe’s second-biggest water company won two contracts for water treatment projects in Algeria worth a total 133 million euros. The shares rose 14.5 cents, or 1.2 percent, to 12.68 euros.

Wendel (MF FP): The investment business reports full-year revenue before the market opens in Paris. The shares added 80.5 cents, or 2.6 percent, to 31.95 euros.

To contact the reporter on this story: Rudy Ruitenberg in Paris at rruitenberg@bloomberg.net.

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Hypo Real Estate, Pfleiderer, Postbank: German Equity Preview

By Nadja Brandt

Feb. 20 (Bloomberg) -- The following is a list of companies whose shares may have unusual price changes in Germany. Stock symbols are in parentheses, and share prices are from the previous close.

The X-DAX Index dropped 1 percent to 4,157.71. The measure, derived from trading in DAX Index futures, provides an estimate of Germany’s benchmark index. The DAX added 0.2 percent to 4,215.21.

Deutsche Postbank AG (DPB GY): The company’s long-term issuer default rating was downgraded to “A-” from “A” by Fitch Ratings on expectations Germany’s biggest consumer lender will be hurt by the global recession. The shares climbed 5.8 percent to 9.26 euros.

Hypo Real Estate Holding AG (HRX GY): The company’s biggest shareholder, J. C. Flowers & Co., wants about 3 euros ($3.80) a share for its Hypo stake, Frankfurter Allgemeine Zeitung said. The shares climbed 0.6 percent to 1.64 euros.

Pfleiderer AG (PFD4 GY): The laminate-flooring maker with 22 factories on two continents posted an 80 million-euro ($101.6 million) loss last year as the global economic slump hurt orders. The shares increased 0.5 percent to 4.44 euros.

To contact the reporter on this story: Nadja Brandt in Los Angeles at nbrandt@bloomberg.net

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Anglo American, Rentokil, Rio, RBS: U.K., Irish Equity Preview

By Ben Livesey and Sarah Jones

Feb. 20 (Bloomberg) -- The following is a list of companies whose shares may have unusual price changes in U.K. and Irish markets today. Stock symbols are in parentheses and prices are from the last market close.

The benchmark FTSE 100 Index rose 11.54 points, or 0.3 percent, to 4,018.37. The FTSE All-Share Index rose 0.2 percent to 2,019.72 and Ireland’s ISEQ Index lost 0.2 percent to 2,170.08.

Anglo American Plc (AAL LN): The commodity producer today said full-year underlying earnings dropped to $4.36 a share from $4.70 in 2007. The company also suspended dividend payments and said it would cut 19,000 jobs at its operations around the world. The shares rose 8 pence, or 0.7 percent, to 1,236.

BAE Systems Plc (BA/ LN): Europe’s biggest defense company said it is in discussions with Saudia Arabia to provide maintenance support and training for Eurofighter Typhoon aircraft and expects to reach an agreement this year. The shares rose 13.75 pence, or 3.6 percent to 400.

London Stock Exchange Group Plc (LSE LN): Europe’s oldest independent bourse is part of a group including ICAP Plc that is weighing a cash offer for LCH.Clearnet Group Ltd., the Financial Times reported, citing the company. The shares fell 10.25 pence, or 2.2 percent, to 454.75.

Prudential Plc (PRU LN): The U.K.’s second-biggest insurer said life and pension sales dropped 34 percent in the fourth quarter to 3.7 billion pounds ($5.3 billion). The company also said it has a capital surplus of 1.7 billion pounds. The shares fell 4.5 pence, or 1.7 percent, to 256.5.

Rentokil Initial Plc (RTO LN): The world’s biggest pest- control company said full-year profit fell as the company revamped parcel delivery and washroom units and a weakening global economy hurt international sales. The shares fell 0.5 pence, or 1.1 percent, to 45 pence.

Rio Tinto Plc (RIO LN): The world’s third-largest mining company’s independent directors may be seeking the views of its 20 biggest U.K. investors on the possibility of a multibillion- pound rights offer as a response to strong opposition to the plan to raise $19.5 billion from Aluminum Corp. of China, the London- based Times reported.

Separately, the Financial Times reported Rio Tinto’s Australian investors are angry with the company’s refinancing deal, citing investors who met finance director Guy Elliot after the deal was announced. The shares rose 116 pence, or 6.2 percent, to 2,000.

Royal Bank of Scotland Group Plc (RBS LN): The U.K.’s biggest government-controlled bank is seeking to sell part of its U.S. business as well as all or part of the ABN Amro Holding NV Asia businesses it bought in 2007, the Independent reported without attribution. The shares rose 3.7 pence, or 20 percent, to 21.8.

To contact the reporter on this story: Ben Livesey in London at blivesey@bloomberg.netSarah Jones in London at sjones35@bloomberg.net.

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European, U.S. Stock-Index Futures Drop; Asian Shares Retreat

By Adria Cimino

Feb. 20 (Bloomberg) -- European and U.S. stock-index futures declined and Asian shares retreated as earnings reports at companies from Cie. de Saint-Gobain SA and Anglo American Plc to Bridgestone Corp. indicated the global recession is deepening.

Saint-Gobain, Europe’s biggest supplier of building materials, may be active after reporting a drop in profit and saying it plans on selling new shares. Anglo American, the mining company that controls the world’s biggest platinum producer, suspended its dividend as earnings slumped.

Futures on the Dow Jones Euro Stoxx 50 Index, a benchmark for the euro region, fell 2.1 percent to 2,071 at 7:46 a.m. in London. The U.K.’s FTSE 100 Index may decrease 58, according to Cantor Index, a betting firm.

Europe’s Dow Jones Stoxx 600 Index has lost 4.1 percent this week, extending its 2009 slump to 7.6 percent. The regional index has tumbled this year as companies from Electricite de France SA to Diageo Plc posted disappointing results and U.S. Treasury Secretary Timothy Geithner failed to convince investors that his plan to rescue U.S. banks will work.

“This could be a rather damaging end to the week,” Matthew Buckland, a dealer at CMC Markets in London, wrote. “Investors are quite simply running out of short-term confidence with equities.”

U.S. stocks dropped yesterday, sending the Dow Jones Industrial Average to a six-year low, as concern about rising credit-card defaults dragged financial shares to the lowest level since 1995.

The MSCI Asia Pacific Index sank 2.3 percent today as Japan’s Topix Index fell to its lowest since January 1984. Standard & Poor’s 500 Index futures slid 1 percent.

Saint-Gobain

Saint-Gobain plans to sell 1.5 billion euros of new shares to shore up capital eroded by slowing construction and an antitrust fine. Net income dropped 7.3 percent to 1.38 billion euros last year and net debt increased 18 percent to 11.7 billion euros, the company said. The global economic crisis makes the 2010 targets set in 2007 “obsolete,” it said.

Lafarge SA, the world’s largest cement maker, reported plans to sell 1.5 billion euros ($1.9 billion) in shares to help bolster finances after fourth-quarter earnings declined.

Lafarge said cost-cutting initiatives will be extended to help save 200 million euros in 2009 and Lafarge’s investment budget will decline by the same amount to 1.8 billion euros. Fourth-quarter profit slid to 40 million euros from 375 million euros a year earlier, when the French company booked disposal gains.

Anglo American

Anglo American said it will resume dividend payments “as soon as market conditions allow. Full-year underlying earnings dropped to $4.36 a share from $4.40 in 2007.

Bridgestone sank 7.4 percent to 1,251 yen after saying net income will probably fall 71 percent to 3 billion yen ($32 million) this year as demand for new cars wanes.

Continental AG, the German tire and car-component manufacturer bought by Schaeffler Group last month, and Michelin & Cie., the world’s second-largest tiremaker, may drop on Bridgestone’s results.

Prudential Plc, the U.K.’s second-largest insurer, said life and pensions sales dropped 34 percent in the fourth quarter. Sales dropped to 3.7 billion pounds ($5.3 billion) from 5.6 billion pounds in the same period a year earlier, the insurer said.

Swiss Life Holding AG, Switzerland’s biggest life insurer, said full-year profit fell to 340 million Swiss francs ($288 million) from 1.37 billion francs a year earlier.

Royal Ahold NV, the Dutch owner of the U.S. Stop & Shop supermarket chain, had its recommendation cut to “underweight” from “equal weight” at Morgan Stanley. The analysts cited a “deeper pension deficit.”

To contact the reporter on this story: Adria Cimino in Paris at acimino1@bloomberg.net.

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China’s $3 Trillion Meets U.S.’s $14 Trillion: William Pesek

Commentary by William Pesek

Feb. 20 (Bloomberg) -- China’s economy, depending on your bias, will surpass the U.S. by 2020, 2030, 2050 -- or never. Yet China’s economy might already be bigger than the U.S.’s.

The point isn’t to fish for hate mail, but to demonstrate how disorienting the world has become. Remember how two years ago most people said the subprime crisis was containable, Asia was immune to global turmoil, and Goldman Sachs Group Inc. alumni could do no wrong? Well, think again.

My Jan. 21 column headlined: “A $17 Trillion Alliance Can Save World Economies.” Critics had much to say about my argument that the U.S. and China must drop the nationalism and cooperate. They had even more to say about figures.

Many took exception to my claim that the U.S. economy is worth $14 trillion and China’s $3.3 trillion. Most argued the U.S. figure -- from the World Bank -- was overstated. Others wondered if the Chinese figure was too high. Some argued it was too low.

All this makes you consider our goalposts. The methods used to calculate gross domestic product may not be valid as the global economy swoons.

Take China. At its most basic level, GDP is the total market value of final goods and services a nation produces in a given year. Andy Xie, a Shanghai-based independent economist, puts China’s GDP at $4.1 trillion to $4.3 trillion. Xie isn’t alone. Some put the figure at $4.4 trillion.

Gaining on Japan

Xie’s calculations are as follows. China’s exports were about $1.4 trillion last year, while total labor income was about $2.4 trillion, capital income was about $550 billion and government income was about $600 billion. Then he subtracts about $800 billion to account for the depreciation of roads, properties and other facilities.

If correct, China has just about caught up with Japan, the second-biggest economy.

Or is China really a shell of its claimed size? You have to wonder about a place that every couple of years finds an economy the size of Austria it wasn’t aware of, as it did in late 2005. In January, China suddenly said its economy overtook Germany’s to become the third-largest in 2007.

Who knows, next year statisticians may say China has surpassed the U.S. China’s data are about as accurate as tossing a dart at a chart on the wall.

Scale Issues

The point isn’t to insult Chinese officials. China’s is a structurally imbalanced economy distorted by top-down policies and considerable “gray activities” that are hard to measure. There also are daunting scale issues.

Think about it. With modest resources, Chinese officials sitting in a room need to condense and capture the activities of more than 1.3 billion people at many levels of poverty and prosperity over 365 days. Then, they are expected to come up with a single figure that news agencies can headline and traders can react to.

“It’s always going to be Sisyphus-ian,” says Stephen Green, a Shanghai-based economist at Standard Chartered Plc, referring to a king in Greek mythology condemned to roll a boulder up a hill, only to watch it roll down again.

Not surprisingly, many readers doubt the brawn of China’s economy. The skepticism is over how any country can announce such huge revisions and be believed. Some also point to a lack of transparency (not that the U.S. has much these days) and the quality of Chinese goods.

U.S. Mirage

Looking at the U.S., there is cause to doubt the size of the world’s biggest economy. The reason? Wall Street.

Economies that are highly reliant on financial flows “are less transparent,” says Glenn Maguire, chief Asia economist at Societe Generale SA in Hong Kong. “That means any economy that has depended on financial services for growth. Financial-sector profits were responsible for most of the growth in U.S. profits in this cycle.”

Is the size of the U.S. economy really a mirage based on irresponsible, asset-inflating monetary policy? The financial products that created so much wealth and are now destroying it were built upon existing ones, and so on. U.S. prosperity, one could argue, is predicated on several layers of over-inflated assets and, thus, by extension so is the world economy.

When you have a mispricing of asset values on a national or international scale, it’s hard to know what’s real and what isn’t -- what genuinely is floating around in the financial ether, and what’s not. And when do we stop referring to economies such as the U.S. as “industrialized”? One is hard-pressed to name many products that are actually made in America.

That leaves services, the value of which is devilishly hard to measure. Chinese officials who think they can trade in $682 billion of U.S. government debt for tangible goods that will be loaded onto ships and delivered to Shanghai are dreaming.

So, the size of the U.S. economy could be a figment of statisticians’ imagination. So could China’s. It’s no longer clear what to believe. Making sense of the world is getting harder by the day.

(William Pesek is a Bloomberg News columnist. The opinions expressed are his own.)

To contact the writer of this column: William Pesek in Tokyo at wpesek@bloomberg.net

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Caltex Australia Brings Forward Maintenance at Sydney Refinery

By Angela Macdonald-Smith

Feb. 20 (Bloomberg) -- Caltex Australia Ltd., the nation’s biggest oil refiner, said it brought forward planned maintenance at the catalytic cracker at its Kurnell plant near Sydney by two months to March.

The work on the unit will probably last between four and six weeks, Des King, managing director of Sydney-based Caltex Australia, said today in an interview. Major maintenance planned in the third quarter at Caltex’s second plant, near Brisbane, will affect about half the refinery and may last as long as seven weeks, he said.

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

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Exxon May Shut Singapore Units for Maintenance, Reuters Reports

By Shamim Adam

Feb. 20 (Bloomberg) -- Exxon Mobil Corp. will shut some of its refinery and petrochemical units from March for a month or longer for maintenance work, Reuters reported, citing unidentified people.

The plants that will be shut include a naphtha cracker and an aromatics unit, Reuters said on its Web site. Exxon Mobil declined to confirm the shutdowns, the report said.

To contact the reporter on this story: Shamim Adam in Singapore at sadam2@bloomberg.net

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Sinopec Starts Building $2 Billion Ethylene Plant in Wuhan

By Wang Ying

Feb. 20 (Bloomberg) -- China Petroleum & Chemical Corp., the nation’s biggest oil refiner, started building an ethylene plant costing more than 14 billion yuan ($2 billion) in the central province of Hubei, the government said.

Sinopec, as China Petroleum is known, will complete the 800,000 metric-ton-a-year chemical plant in Wuhan by 2011, the Chinese government said in a statement on its Web site. Construction started Feb. 18, it said.

SK Energy Co., South Korea’s biggest oil refiner, will take a 25 percent stake in the venture, Wang Tianpu, president of Sinopec, said in May last year.

To contact the reporter on this story: Wang Ying in Beijing at wang30@bloomberg.net

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Woodside Says Able to Raise All Funds It Needs From Debt Market

By Angela Macdonald-Smith and Heidi Couch

Feb. 20 (Bloomberg) -- Woodside Petroleum Ltd., Australia’s second-largest oil and gas producer, expects to be able to raise all the funds it needs this year of as much as $1.7 billion from the debt markets, without relying on asset sales.

Any proceeds from the divestment of ventures will reduce the amount required to be raised in debt, Mark Chatterji, chief financial officer of Perth-based Woodside, said today in an interview. Any asset sales will be outside the company’s liquefied natural gas-focused areas of Western Australia and the Timor Sea, the company said this week.

Woodside, 34 percent owned by Royal Dutch Shell Plc, said Feb. 18 it may sell some assets, is deferring or cutting A$500 million ($323 million) of spending and will take on more debt to fund its expansion in LNG. Capital investment is set to jump this year, mostly because of construction of the A$12 billion Pluto LNG project in Western Australia.

“The debt markets have been challenging for everybody,” Chatterji said. “We expect our external funding requirement for the year to be in the range of $1 to $1.7 billion, but we expect that we can source all of those fundings from the debt markets. Obviously if you realize investor proceeds, the amount of debt we would need would go down.”

Woodside rose as much as A$1.03, or 3.1 percent, to A$34.55 in Sydney trading and was at A$34.20 at 10:59 a.m. local time. The gain outpaced an advance of as much as 1.1 percent in the Australian stock exchange’s benchmark energy index.

The company signed loan agreements of $1.5 billion last year and agreed additional debt of $800 million in January. Crude oil prices have slumped about 74 percent since a record $147.27 a barrel in July. Woodside said this week it expects to need between $1 billion and $1.7 billion in additional external funding this year to help fund Pluto.

U.S. Bonds

“We believe this amount of debt should be able to be raised, most likely through the U.S. bond market” JPMorgan Chase & Co. said in a Feb. 18 report. “We believe that Woodside will pull every lever at its disposal before it taps the equity market.”

The Pluto project, which will more than double Woodside’s LNG output once it starts up at the end of 2010, should be between 85 percent and 90 percent complete by the end of the year, Chatterji said.

Woodside may sell its Otway natural gas project off southeast Australia, which may raise as much as A$800 million, Macquarie Group Ltd. said in a Feb. 19 report.

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

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Gloucester Coal Agrees to Buy Whitehaven for A$545 Million

By Jesse Riseborough

Feb. 20 (Bloomberg) -- Gloucester Coal Ltd., an Australian producer backed by Noble Group Ltd., agreed to acquire Whitehaven Coal Ltd. for A$545 million ($351 million) in shares, adding five mines and a stake in an export terminal project.

Gloucester offered 1 share for every 2.45 Whitehaven share, the Sydney-based companies said today in a joint statement. That values Whitehaven’s shares at 12 percent less than yesterday’s close. The deal is supported by both boards, the statement said.

Gloucester expects record first-half profit and has forecast thermal coal demand to remain strong. China, the world’s biggest user of the fuel, may boost imports from Australia this year, according to Merrill Lynch & Co.

“They are going to be making fairly decent profits as a combined entity, especially with the growth profile they’ve got,” Andrew Harrington, a mining analyst at Patersons Securities Ltd., said today by phone from Sydney. “It looks like it’s a pretty good deal for Gloucester given the merger ratio is at a discount rather than a premium.”

Gloucester, which has a market value of A$278 million, rose 4 percent to A$3.41 at 1:27 p.m. Sydney time on the Australian stock exchange. Whitehaven, which has a market value of A$598 million, fell 3 percent to A$1.47. The takeover ratio values Whitehaven shares at A$1.34. They closed yesterday at A$1.515.

Discount Argument

“You could argue there is a discount, but if you look back anywhere from three to 12 months then you could equally argue there is a premium,” Whitehaven Managing Director Tony Haggarty said on a conference call with analysts and reporters. “Both boards are very satisfied with the way the price has come out.”

Whitehaven directors, representing 74 percent of the stock, plan to accept the bid, the statement said. Noble, a Hong Kong- based commodity supplier, owns 21.7 percent of Gloucester and closely held U.S.-based mining investment company, AMCI Inc. holds 9.9 percent. Both market coal for Gloucester. AMCI controls 33 percent of Whitehaven.

Contract prices for energy coal more than doubled to a record last year as demand from Asian utilities jumped and bottlenecks at Australian ports curbed supply growth. The combined company will have sales of about 75 percent thermal coal and 25 percent coking coal, according to a slides presentation.

UBS AG is advising Gloucester. Grant Samuel & Associates Pty and Wilson HTM Investment Group are advising Whitehaven. Whitehaven’s Haggarty will initially head the renamed, combined company before being succeeded by his Gloucester counterpart, Rob Lord, the statement said.

Seven Mines

Whitehaven operates the Tarrawonga, Werris Creek, Rocglen and Sunnyside thermal coal mines in New South Wales state. The combined company, based on 2008 figures, would produce about 4.5 million metric tons of coal annually from seven mines and have reserves of 190 million tons and resources of 922 million tons, the companies said. It will also have cash of A$102 million, the statement said.

Whitehaven also owns an 11 percent stake in the Newcastle Coal Infrastructure Group, which is building a new export terminal at the harbor.

Thermal coal prices may drop about 36 percent to $80 a ton for the year starting April 1 amid a deepening global recession, Merrill Lynch analysts led by Sydney-based Tom Price said in a Feb 9 report. That’s still the second-highest on record. Prices at Australia’s Newcastle port, the world’s biggest export harbor for the fuel, rose 2.6 percent, to $80.24 a ton in the week to Feb. 13, according to the globalCOAL NEWC Index.

“We will be contacting all key shareholders today, we would hope that Noble would see this as a good deal for all shareholders, that’s how we see it,” Gloucester’s Lord said. He declined to comment if Noble were aware of the bid.

Gloucester shareholders, including Noble and AMCI, voted against a A$391 million takeover by Xstrata Plc in 2007.

Hans Mende, a director of Whitehaven and president of AMCI, a closely held mining company, has “indicated his support” for the transaction, Whitehaven’s Haggarty said. Mende owns a 19.9 percent stake in Whitehaven and AMCI hold a 13.3 percent stake.

To contact the reporter on this story: Jesse Riseborough in Melbourne at jriseborough@bloomberg.net

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Caltex Australia Reduces Spending, Scraps Dividend on Downturn

By Angela Macdonald-Smith

Feb. 20 (Bloomberg) -- Caltex Australia Ltd., the nation’s biggest oil refiner, will revert to “more modest” investment over the next three years and scrapped its final dividend payment citing a weaker economic outlook.

Spending will drop to about A$300 million ($192 million) this year, down from more than A$400 million in 2008, and fall to about A$250 million the next two years, Des King, managing director of the Sydney-based company, said today. Caltex fell to a two-week low after saying it won’t pay a second-half dividend because of a loss in the period.

Caltex Australia’s production of gasoline, diesel and jet fuel slipped 10 percent last year because of unplanned closures at its two refineries near Sydney and Brisbane, which boosted costs. Crude-oil prices traded in New York have slumped 73 percent from a record $147.27 a barrel in July, causing losses for Caltex on the value of its inventories.

“The capex coming down is a good thing for them,” said Lafitani Sotiriou, an analyst at Southern Cross Equities Ltd. in Sydney. “They set out two or three years ago to have a massive capex spend of over A$1 billion over three years and a lot of those projects are coming to fruition.”

Caltex Australia, half-owned by Chevron Corp., slumped as much as A$1.04, or 11 percent, to A$8.56 on the Australian stock exchange after the dividend cut. The stock was at A$8.62 at 12:53 p.m. local time. The drop compared with a decline of as much as 2 percent in the exchange’s benchmark index.

‘Difficult Decision’

Scrapping the final dividend “was certainly a difficult decision and we knew that some of the shareholders might be disappointed,” King said in a telephone interview. “It goes back to our conviction to maintain good cash flow and a strong balance sheet. As we look at 2009 and the uncertain times globally, conservatism around cash we think is important.”

Caltex expects to spend A$50 million this year completing construction of a diesel unit at the Lytton refinery near Brisbane that will enable the company to meet stricter grades for sulfur in diesel that came into effect in Australia on Jan. 1. That will complete a total investment at the company to meet cleaner fuel standards of between A$800 million and A$850 million, King said.

The diesel unit is due to start production in the second quarter at a cost of about A$320 million, up from an original budget of A$250 million.

Caltex has the option of delaying or trimming other planned spending should the economic outlook worsen, King said.

Profit Plunges

Full-year net income plunged 95 percent to A$34 million as production fell and a drop in the price of crude oil cut the value of stockpiles, the company said earlier in a statement to the exchange. Operating profit, which excludes changes in the value of stockpiles, fell 58 percent to A$186 million in the year ended Dec. 31, in line with the company’s forecast last month.

“Caltex’s financial performance in 2008 was impacted by the unprecedented decline in the Australian dollar and crude price, and the impact of lower refinery production,” the company said in the statement. “Caltex operates in a highly competitive market.”

The company had an operating loss of A$10 million in the second half, down from a profit of A$150 million a year earlier. Full-year sales gained 24 percent to A$23.6 billion.

Production of transport fuels should rise this year to more than 10 billion liters, even with “major planned maintenance,” King said. The catalytic cracking unit at the Kurnell plant near Sydney will be halted for maintenance in March, about two months earlier than planned, while about half the Lytton plant will be shut for maintenance in the third quarter, he said.

Editors: John Viljoen, Ang Bee Lin.

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

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Asia Currencies: Korea Won, Taiwan Dollar Lead Weekly Declines

By Lilian Karunungan

Feb. 20 (Bloomberg) -- Asian currencies headed for their biggest weekly drop in three months, led by South Korea’s won and Taiwan’s dollar, on concern tumbling exports will drag more of the region’s economies into recession.

The Bloomberg-JPMorgan Asia Dollar Index, which tracks the region’s 10 most-active currencies excluding the yen, slid to its lowest since Dec. 2. The won dropped below 1,500 per dollar for the first time since November and Taiwan’s currency sank to a five-year low. Reports this week showed Singapore’s exports fell the most in at least 22 years and Taiwan’s economy shrank at the fastest pace on record.

“We have seen some liquidity crunch in the U.S. dollar,” said Tetsuo Yoshikoshi, senior economist at Sumitomo Mitsui Banking Corp. in Singapore. “The economies in this region have been weakening quite sharply. That is the basic reason why Asian currencies are quite weak.”

The won declined 1.4 percent to 1,502.60 per dollar as of 11:38 a.m. in Seoul, headed for a weekly drop of 6.5 percent, according to Seoul Money Brokerage Services Ltd. Taiwan’s dollar slid 0.3 percent to NT$34.775, dropping for the 12th day in a row. It earlier touched NT$34.776, the lowest level since May 2003.

The Malaysian ringgit reached a two-year low of 3.6680 per dollar before trading 0.5 percent lower at 3.6690. Citigroup Inc. forecast the currency will slide as low as 3.8 by June, the level it was pegged at for about seven years before a fixed exchange rate ended in July 2005.

Recessions

Singapore’s non-oil domestic exports dropped 35 percent from a year earlier in January, while Taiwan’s economy shrank 8.4 percent in the fourth quarter of 2008, official figures show. Both economies, along with Japan, the U.S. and Europe, are in recession. South Korea’s economy, which shrank the most in a decade in the last quarter, is deteriorating, Finance Minister Yoon Jeung Hyun said Feb. 18.

The won has plunged 16 percent so far this year, making it the worst performer among the 10 most-traded Asian currencies outside Japan. None of the currencies has gained.

“The won has come under pressure with concerns about dollar funding in Korea and repaying of short-term debt,” said Callum Henderson, head of global currency strategy at Standard Chartered Plc in Singapore. “There’s a significant amount of short-term debt coming due, but compared to the fourth quarter last year, it’ll be less of a problem this time around.”

South Korean banks’ demand for dollars is decreasing as foreign-currency debt maturing every month this year is at least 50 percent lower than in the fourth quarter, the central bank said this week.

Elsewhere, the Indonesian rupiah slumped 0.7 percent to 12,065 per dollar, set for a 2.5 percent weekly loss. The Philippine peso and the Thai baht both dropped 0.5 percent, to 48.185 and 35.74, respectively. Vietnam’s dong was little changed at 17,482.

To contact the reporter on this story: Lilian Karunungan in Singapore at at lkarunungan@bloomberg.net.

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Australia, N.Z. Dollars Set for 2nd Weekly Loss on Bank Concern

By Candice Zachariahs

Feb. 20 (Bloomberg) -- The Australian and New Zealand dollars headed for a second weekly drop against the U.S. currency as concern over banks’ vulnerability to worsening eastern European economies pushed down higher-yielding assets.

New Zealand’s dollar dropped for a second day after the Treasury Department said the cash budget deficit was wider than expected at the end of December amid a decline in tax revenue. The Australian dollar briefly pared losses after central bank governor Glenn Stevens said the nation’s economy will recover later this year.

“The next stage of the global banking crisis is we start to question whether we have a coordinated cross-border plan for Europe,” said Robert Rennie, chief currency strategist at Westpac Banking Corp. in Sydney. “A material move lower in the euro would weigh on the Aussie and Kiwi,” he said, referring to the currencies by their nicknames.

Australia’s currency declined 2.6 percent to 64.17 U.S. cents as of 2:22 p.m. in Sydney from late last week in New York. It traded at 60.45 yen from 60.33 yen on Feb. 13. New Zealand’s dollar slid 3.3 percent to 50.53 U.S. cents, and was at 47.60 yen from 48.03 yen.

The two South Pacific currencies fell this week after Moody’s Investors Service said on Feb. 17 it may cut the ratings of some banks with units in eastern Europe, including Austrian and Swedish lenders. The rating company’s report sent the euro to a 10-week low that day.

‘Powerful’ Stimulus

Demand for Australia’s dollar increased after Stevens said interest rates at a 45-year low will provide a “powerful” stimulus to the economy. After his comments, traders reduced bets to zero that the RBA will cut rates by more than 50 basis points at its March 3 meeting, according to a Credit Suisse index based on swaps.

The central bank governor also said the economy of China, Australia’s largest trading partner, is showing “tentative” signs of improvement. Sentiment in global financial markets remains fragile, he added.

Stevens “indicated that they’re prepared to pause in their interest-rate cycle,” said Richard Grace, chief currency strategist in Sydney at Commonwealth Bank of Australia. “There are ongoing concerns about what’s happening in the global economy so the currency is only going to grind higher rather than shoot higher.”

Benchmark interest rates are 3.25 percent in Australia and 3.5 percent in New Zealand, compared with 0.1 percent in Japan and as low as zero in the U.S., attracting investors to the South Pacific nations’ higher-yielding assets. The risk in such trades is that currency market moves will erase profits.

The central bank will keep borrowing costs on hold at its March meeting, before cutting its benchmark rate to 2.75 percent in April, Commonwealth Bank predicts.

N.Z. Dollar

New Zealand’s dollar fell after the Treasury said the cash deficit was NZ$8.26 billion ($4.18 billion) in the six months ended Dec. 31, or NZ$856 million more than was forecast in December. The economy is shrinking for a fifth straight quarter, Finance Minister Bill English said Feb. 18.

The Australian dollar advanced versus the yen this week as an increase in the risk of holding Japanese corporate debt deterred overseas investors from buying the nation’s assets.

The rising cost to protect buyers of Japan’s sovereign bonds against default signals the yen may start to lose its status as a “haven” currency, Barclays Capital, the world’s third-largest foreign-exchange trader, said yesterday.

Debt Sale

Australia sold A$599 million ($385 million) of June 2011 bonds today at a weighted average yield of 2.93 percent in the fifth auction of its expanded borrowing program. Buyers submitted offers for 4.5 times the amount of debt on offer, the Australian Office of Financial Management said.

Australian government bonds were little changed. The yield on the benchmark 10-year note fell one basis points, or 0.01 percentage point, to 4.21 percent, according to data compiled by Bloomberg. The price of the 5.25 percent security due March 2019 slipped 0.089, or A$0.89 per A$1,000 face amount, to 108.25.

New Zealand’s two-year swap rate, a fixed payment made to receive floating rates, rose to 3.29 percent from 3.27 yesterday.

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

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South Korean Won Falls to Three-Month Low on Recession Concern

By Bob Chen

Feb. 20 (Bloomberg) -- South Korea’s won weakened beyond 1,500 per dollar for the first time in three months on concern falling exports will worsen a shortage of dollars and strain banks’ ability to repay debt.

The currency has plunged 16 percent so far this year, making it the worst performer among the 10 most-traded Asian currencies outside Japan. Rising U.S. and European government bond sales will lead to a “crowding out” of developing-nation debt, making it harder for them to roll over maturing obligations, Nick Chamie, global head of emerging markets research in Toronto at RBC Capital Markets, wrote in a report yesterday.

“The won has come under pressure with concerns about dollar funding in Korea and repaying of short-term debt,” said Callum Henderson, head of global currency strategy at Standard Chartered Plc in Singapore. “There’s a significant amount of short-term debt coming due, but compared to the fourth quarter last year, it’ll be less of a problem this time around.”

The won declined 1.3 percent to 1,500 per dollar as of 11:13 a.m. in Seoul, headed for a weekly drop of 6.4 percent, according to Seoul Money Brokerage Services Ltd. It earlier touched 1,507, the weakest level since Nov. 26.

South Korean banks’ demand for dollars is decreasing as foreign-currency debt maturing every month this year is at least 50 percent lower than in the fourth quarter, a central bank official said this week.

Debt Payments

Monthly foreign debt payments have dropped to about $4 billion, from between $8 billion and $9 billion in the final three months of 2008, Ahn Byung Chan, director general of the Bank of Korea’s international bureau, said Feb. 17.

A pool of Asian nations’ foreign-exchange reserves formed to enhance the region’s financial stability will be expanded to $120 billion from $80 billion, Yonhap News reported, citing an official at South Korea’s finance ministry it didn’t name. Asian financial officials meeting in Thailand will announce the decision on Feb. 22, according to the report.

Five-year bonds gained, with the yield on the 5.75 percent bond due September 2013 falling 7 basis points to 4.64 percent.

“The yield is down today as investors seem to be betting that the government may issue more short-and medium-term debt rather than long-term securities,” said Seo Chul Soo, a fixed- income analyst at Daewoo Securities Co.

The Korean government needs to issue more bonds as it plans to increase stimulus spending to revive an economy that had its worst contraction last quarter since the 1997-1998 Asian financial crisis.

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

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Dollar May Rise to Four-Month High Against Yen, Citigroup Says

By Ron Harui

Feb. 20 (Bloomberg) -- The dollar may rise to a four-month high against the yen should it close above a so-called neckline at 94.65, Citigroup Inc. said, citing technical charts.

The level of 94.65 yen represents the neckline of a “very well defined double-bottom” pattern, New York-based Tom Fitzpatrick and London-based Shyam Devani wrote in a research note yesterday. A double bottom forms when a currency makes two consecutive troughs of about the same depth, and indicates a currency may rebound. The neckline passes through the highest point of the double bottom.

“The target on a close above here would be for a move to 102,” the Citigroup analysts wrote. “There are increasing signs that, contrary to popular wisdom, we may be starting a period of broad-based yen weakness that could see both dollar- yen and the yen crosses higher in the weeks ahead.”

The dollar traded at 94.14 yen as of 10:33 a.m. in Tokyo from 94.20 yen late in New York yesterday when it reached 94.46 yen, the highest level since Jan. 6. The 102 yen level was last seen on Oct. 21. The greenback has risen 3.8 percent against the yen this year after a 19 percent decline in 2008, the most in more than two decades.

The U.S. currency also may gain versus the yen as it has “moved decisively above the 55-day moving average in recent days,” Fitzpatrick and Devani wrote. The 55-day moving average was 90.75 yen, according to data compiled by Bloomberg.

In technical analysis, investors and analysts study charts of trading patterns and prices to forecast changes in a security, commodity, currency or index.

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

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Dollar May Rise to Four-Month High Against Yen, Citigroup Says

By Ron Harui

Feb. 20 (Bloomberg) -- The dollar may rise to a four-month high against the yen should it close above a so-called neckline at 94.65, Citigroup Inc. said, citing technical charts.

The level of 94.65 yen represents the neckline of a “very well defined double-bottom” pattern, New York-based Tom Fitzpatrick and London-based Shyam Devani wrote in a research note yesterday. A double bottom forms when a currency makes two consecutive troughs of about the same depth, and indicates a currency may rebound. The neckline passes through the highest point of the double bottom.

“The target on a close above here would be for a move to 102,” the Citigroup analysts wrote. “There are increasing signs that, contrary to popular wisdom, we may be starting a period of broad-based yen weakness that could see both dollar- yen and the yen crosses higher in the weeks ahead.”

The dollar traded at 94.14 yen as of 10:33 a.m. in Tokyo from 94.20 yen late in New York yesterday when it reached 94.46 yen, the highest level since Jan. 6. The 102 yen level was last seen on Oct. 21. The greenback has risen 3.8 percent against the yen this year after a 19 percent decline in 2008, the most in more than two decades.

The U.S. currency also may gain versus the yen as it has “moved decisively above the 55-day moving average in recent days,” Fitzpatrick and Devani wrote. The 55-day moving average was 90.75 yen, according to data compiled by Bloomberg.

In technical analysis, investors and analysts study charts of trading patterns and prices to forecast changes in a security, commodity, currency or index.

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

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Euro Heads for Biggest Weekly Fall in One Month Against Dollar

By Yasuhiko Seki and Ron Harui

Feb. 20 (Bloomberg) -- The euro headed for the biggest weekly decline in a month against the dollar on speculation European Central Bank President Jean-Claude Trichet will signal in a speech today that he may cut interest rates to spur growth.

The 16-nation currency is set for its seventh weekly decline in eight weeks after ECB council member Erkki Liikanen flagged the possibility of using unorthodox monetary policy to deal with a deepening recession and the financial system’s meltdown. The yen headed for a fourth weekly drop versus the dollar, the longest losing stretch since December 2007, on speculation demand for the currency as a haven will wane.

“The outlook for a narrowing interest-rate differential is negative for the euro,” said Akio Yoshino, chief economist at Societe Generale Asset Management Ltd. in Tokyo. “The euro may fall to below $1.25 in the near future.”

Europe’s currency dropped to $1.2620 as of 11:31 a.m. in Tokyo from $1.2674 late in New York yesterday. It touched $1.2513 on Feb. 18, the lowest level since Nov. 21. The euro weakened to 118.76 yen from 119.37 yesterday, when it reached 120.34 yen, the highest level since Jan. 19. The U.S. currency traded at 94.11 yen, from 94.20 yesterday.

The ECB’s Liikanen said the bank hasn’t used all the tools at its disposal to revive the economy, which is facing its worst recession since World War II.

“I’m convinced that we have not exhausted our creativity and our capacity to take initiatives,” Liikanen, who also heads the Bank of Finland in Helsinki, said in an interview with Finnish newspapers including Turun Sanomat and Kaleva published today.

Interest Rates

The ECB cut its benchmark interest rate by 2.25 percentage points since early October to 2 percent. The bank may lower borrowing costs further at its next meeting on March 5, Trichet and Liikanen have both said. A Bloomberg News survey of 20 analysts shows that the ECB will lower the borrowing cost to 1.5 percent at the March meeting.

Declines in the euro may be limited as speculation eases that eastern European banking losses will cause regional financial turmoil to worsen.

French Finance Minister Christine Lagarde, after talks yesterday with U.S. Treasury Secretary Timothy Geithner, said she wants the Group of 20 to take swift action to help end the global financial crisis. Countries sharing the euro need “to avoid severe difficulties of the kind that would require the involvement of the IMF,” she said.

Germany’s Merkel

Germany’s Chancellor Angela Merkel said yesterday in Berlin the region is ”strong.” She declined to comment on whether Europe’s largest economy would step in to bail out any of the 16 euro members, saying she won’t speculate on the relative health of other countries.

Goldman Sachs Group Inc. said yesterday the euro will strengthen more than 6 percent to $1.35.

Poland’s zloty rose 0.5 percent to 4.7935 per euro and the Czech koruna eased 0.2 percent to 28.972. The koruna touched 29.68 on Feb. 17, the weakest level since October 2005.

“Optimism for possible financial aid to Eastern European nations is emerging,” said Daisuke Uno, chief strategist at Sumitomo Mitsui Banking Corp., a unit of Japan’s third-largest banking group. “This will weaken selling of the euro for now.”

Dollar Index

The ICE’s Dollar Index was poised for a second weekly gain on speculation that the U.S. government’s plans will help stem the recession in the world’s largest economy.

The Dollar Index, which tracks the U.S. currency versus the euro, yen, pound, Canadian dollar, Swedish krona and Swiss franc, rose to a three-month high on Feb. 18 as President Barack Obama signed a $787 billion economic-stimulus bill on Feb. 17 and proposed a $275 billion housing program the next day. The dollar strengthened against all 16 major currencies this week.

“The Obama administration is acting quickly and proactively in taking policy steps,” said Masanobu Ishikawa, general manager of foreign exchange at Tokyo Forex & Ueda Harlow Ltd., Japan’s largest currency broker. “The bias is for the dollar to be bought” to 94.50 yen and $1.2630 per euro today, he said.

The yen fell against 12 of 16 major currencies this week as Finance Minister Shoichi Nakagawa quit, spurring concern the government’s 10 trillion yen ($106 billion) stimulus plan will stall in parliament. Japan’s economy shrank the most since 1974 last quarter, a Cabinet Office report showed Feb. 16.

Yen Weakens

The dollar rose above 94 yen yesterday for the first time since Jan. 7 when it touched a year-to-date high of 94.63 yen.

“The yen seems to have lost some of its ‘safe-haven’ status,” said Danica Hampton, a currency strategist at Bank of New Zealand Ltd. in Wellington. “It’s become evident Japan is not immune to the global recession and the sudden resignation of the nation’s Finance Minister has raised fears fiscal spending plans may be delayed.”

Japan’s current-account surplus makes the yen attractive to investors in times of turmoil as it means the country doesn’t rely on overseas lenders.

The yen’s losses were limited as Japanese exporters sold the greenback to hedge the cost of sales generated outside Japan before the country’s fiscal year ends next month.

“The dollar has visited levels not seen since early this year, giving impetus for exporters to sell the currency” at between 95 yen and 98 yen, said Takashi Kudo, director of foreign-exchange sales in Tokyo at NTT SmartTrade Inc., a unit of Nippon Telegraph & Telephone Corp.

The yen surged 23 percent against the dollar last year, crippling exports from Pioneer Corp., Toyota Motor Corp. and Sony Corp., all of which have cut jobs.

“A rate stronger than 100 makes things difficult,” said Takeo Fukui, president of Japan’s second-largest automaker, Honda Motor Co. “It will not be easy to make a profit next fiscal year.”

To contact the reporter on this story: Yasuhiko Seki in Tokyo at yseki5@bloomberg.netRon Harui in Singapore at rharui@bloomberg.net

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SPDR Gold Trust Holdings Climb to Record 1,028.98 Metric Tons

By Glenys Sim

Feb. 20 (Bloomberg) -- Gold holdings in the SPDR Gold Trust, the biggest exchange-traded fund backed by bullion, advanced to a record, according to figures on the company’s Web site.

The fund held 1,028.98 metric tons of bullion as of yesterday, up 0.5 percent from Feb. 18, and a 4.4 percent increase this week. The fund’s holdings are just behind the 1,040 tons held by Switzerland, the sixth-largest stockpile.

The precious metal gained to $980.50 an ounce in the London afternoon fixing yesterday from $964 an ounce on Feb. 18. Gold for immediate delivery was little changed at $973.05 an ounce at 9:39 a.m. in Singapore today.

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

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Oil Falls on Concern OPEC Cuts Won’t Outweigh Demand Declines

By Christian Schmollinger and Samantha Zee

Feb. 20 (Bloomberg) -- Crude oil fell, paring its largest gain in seven weeks, on concern that OPEC output cuts may not erode supply enough amid weak global demand for fuels.

Oil jumped 14 percent yesterday after a U.S. Energy Department report showed inventories dropped 138,000 barrels to 350.6 million barrels last week, the first decline this year. Crude imports to the U.S. fell 8.9 percent. The International Energy Agency, OPEC and the Department have all cut their forecasts for 2009 oil demand because of the global recession.

“The bearish picture for crude oil consumption is still in place with the slowing of the global economy,” said Mike Sander, an investment adviser at Sander Capital Advisors Inc. in Seattle. “There are just limited reasons why crude oil should go up in price, unless imports slow even further, which is extremely doubtful due to huge budget imbalances in OPEC and non-OPEC exporting countries.”

Crude oil for March delivery fell as much as 84 cents, or 2 percent, to $38.64 a barrel in electronic trading on the New York Mercantile Exchange and was trading at $38.85 at 10:19 a.m. Singapore time. The contract rose $4.86 to settle at $39.48 a barrel yesterday. Prices are down 13 percent this year.

The March contract expires tomorrow. The more-active April contract was at $39.38 a barrel, down 80 cents, after rising 7.4 percent to $40.18 a barrel yesterday.

Brent crude oil for April settlement fell as much as 58 cents, or 1.4 percent, to $41.41 a barrel on London’s ICE Futures Europe exchange. It was at $41.56 a barrel at 10:27 a.m. in Singapore. It gained 6.2 percent to $41.99 a barrel yesterday.

Build Forecast

Analysts had forecast a build in U.S. crude inventories of 3.2 million barrels, according to a Bloomberg News survey. Stockpiles had gained in 18 out of the 20 previous weeks.

“The market has been used to seeing bigger than expected builds in U.S. supplies each week and to get an actual negative number gave the market a fresh dose of optimism,” said Mark Pervan, a senior commodity strategist at Australia and New Zealand Banking Group Ltd. in Melbourne. “Still I can’t see anything that’s shown the demand in the market has started to pick up. I think it’s just a matter of limiting supply.”

The IEA on Feb. 11 projected 2009 oil demand will fall by 1 million barrels a day to 84.7 million a day because of a weaker outlook from the International Monetary Fund. The Organization of Petroleum Exporting Countries on Feb. 13 lowered its estimate for this year by 530,000 barrels a day to 85.13 million barrels a day.

U.S. imports of crude dropped 859,000 barrels a day to 8.79 million, the lowest level since September, when ports were shut in the aftermath of hurricanes Gustav and Ike, the report showed.

Cushing Supplies

Supplies at Cushing, Oklahoma, where New York-traded West Texas Intermediate crude is delivered, declined 52,000 barrels to 34.9 million barrels, the report said. Inventories in the week ended Feb. 6 were the highest since at least April 2004, when the department began keeping records for the location.

The price of oil for delivery in April is 62 cents a barrel higher than for March, down from an $8.19 premium on Feb. 12. The spread between the first- and second-month contracts is the lowest since Nov. 20. December futures are $10.03 higher than the front-month contract, versus $10.06 yesterday.

The situation where the front month contract is less than the later-dated futures is known as contango and suggests a lack of demand for oil. The structure encourages storing crude for resale at a later date.

“ A lot of traders have been stockpiling crude for the higher prices one to two months out,” said ANZ’s Pervan. “Now that the spread is starting to narrow that game is starting to lose momentum.”

Gasoline Inventories

Gasoline inventories rose 1.11 million barrels to 218.7 million barrels, the Energy Department said. Stockpiles were forecast to fall by 500,000 barrels, according to the median of responses by 16 analysts in the Bloomberg News survey.

Supplies of distillate fuel, a category that includes heating oil and diesel, dropped 813,000 barrels to 140.8 million, the department said. A 1.5 million-barrel decline was forecast.

Fuel demand during the past four weeks averaged 20 million barrels a day, down 0.1 percent from the average over the same period last year, the report showed. Gasoline consumption averaged 8.9 million barrels a day over the past four weeks, up 0.8 percent from a year earlier.

Gasoline futures for March delivery fell 1.51 cents to $1.0835 a gallon in New York today, after climbing 3.34 cents, or 3.1 percent, to settle at $1.0986 a gallon yesterday.

Heating oil for March delivery lost 1.11 cents to $1.1934 a gallon today. Yesterday, heating oil futures added 5.76 cents, or 5 percent, to end the session at $1.2045 a gallon.

To contact the reporters on this story: Christian Schmollinger in Singapore at christian.s@bloomberg.net; Samantha Zee in Los Angeles at szee@bloomberg.net.

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Chaoda, Haier, Melco, Nine Dragons: Hong Kong Equity Preview

By Hanny Wan

Feb. 20 (Bloomberg) -- The following companies may have unusual price changes in Hong Kong trading. Stock symbols are in parentheses, and share prices are as of the last close.

The Hang Seng Index advanced 7.36, or 0.1 percent, to 13,023.36 yesterday. The Hang Seng China Enterprises Index, which tracks so-called H shares of Chinese companies, added 0.7 percent to 7,266.24.

China approved a stimulus package for the nation’s food, paper, home appliance and other so-called light industries, the State Council said yesterday. The plan will also help boost domestic consumption and create more jobs, it said.

Chaoda Modern Agriculture (Holdings) Ltd. (682 HK) rose 1.6 percent to HK$5.62. China’s largest listed vegetable grower is seeking to raise as much as HK$415.7 million ($54 million) selling 80.4 million new shares at HK$4.94 to HK$5.17 each, according to a share sale document.

Haier Electronics Group Co. (1169 HK), a unit of China’s largest home appliance maker, dropped 2.4 percent to 82 Hong Kong cents.

Hong Kong retailers, Macau stocks: China’s Guangdong province may allow its residents to travel to Hong Kong and Macau more frequently, the Ming Pao newspaper reported, citing contents of a cooperation agreement between officials from the three governments.

Sa Sa International Holdings Ltd., Hong Kong’s biggest cosmetics retailer, was unchanged at HK$2.17. Giordano International Ltd. (709 HK), the Hong Kong-based operator of more than 800 clothing stores in mainland China, added 4.4 percent to HK$1.90.

Galaxy Entertainment Group Ltd. (27 HK), one of six casino license holders in Macau, climbed 4.4 percent to HK$1.18. Melco International Development Ltd. (200 HK), controlled by the son of Macau gaming tycoon Stanley Ho, rose 0.5 percent to HK$2.06.

China BlueChemical Ltd. (3983 HK): The producer of nitrogen fertilizers had its rating cut to “sell” from “buy” by Citigroup Inc., which said earnings will decline this year. The stock advanced 4.8 percent to HK$4.19.

Nine Dragons Paper Holdings Ltd. (2689 HK): Morgan Stanley cut its rating on the stock to “equal-weight” from “overweight,” saying the company needs to reduce its gearing further. Nine Dragons, China’s biggest maker of containerboard paper for packaging, climbed 0.8 percent to HK$2.63.

To contact the reporter on this story: Hanny Wan in Hong Kong at hwan3@bloomberg.net.

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Japanese Stocks Fall on Bad-Loan Concern; Inpex Climbs on Oil

By Masaki Kondo

Feb. 20 (Bloomberg) -- Japanese stocks fell on concern rising bad-loan costs will hurt profits at financial companies, outweighing gains by commodity shares after oil surged.

Mizuho Financial Group Inc., Japan’s No. 2 listed bank, slid 2 percent after Goldman Sachs Group Inc. said rising credit-card defaults may reduce U.S. issuers’ earnings. Bridgestone Corp., the world’s biggest tiremaker, slumped 6.3 percent after saying profit will fall 71 percent this year. Inpex Corp., Japan’s largest oil explorer, climbed 2.8 percent after crude soared the most in seven weeks.

The Nikkei 225 Stock Average declined 43.13, or 0.6 percent, to 7,514.52 as of 9:39 a.m. in Tokyo. The broader Topix index fell 0.74, or 0.1 percent, to 750.85. In New York, the Dow Jones Industrial Average dropped to the lowest close since October 2002, while the Standard & Poor’s 500 Financials Index retreated to the lowest level since January 1995.

“Though stocks here will unavoidably fall after the slump in the U.S. market, the drop won’t be very big,” Soichiro Monji, chief strategist at Tokyo-based Daiwa SB Investments Ltd., which manages $53 billion, said in an interview with Bloomberg Television. “Resource shares will be resilient after the jump in oil prices.”

The Nikkei dropped 3.4 percent this week, while the Topix lost 1.8 percent. The Nikkei has slumped 15 percent this year as government and central bank measures to revive growth failed to restore confidence in the financial system and quell concern that the global recession will deepen.

Rising Bankruptcies

Credit-card defaults may peak at 11 percent of loans by the end of this year, Goldman Sachs analyst Brian Foran said in an e-mail, cutting his 2009 earnings estimate for card issuer American Express Co. by almost 40 percent. Earlier this month, Fitch Ratings said loan failures climbed to 7.5 percent, the highest level since 2005.

Mizuho retreated 2 percent to 192 yen, while bigger rival Mitsubishi UFJ Financial Group Inc. dropped 1.4 percent to 433 yen. Shinsei Bank Ltd., the Japanese lender part-owned by private-equity investor Christopher Flowers, slumped 6.5 percent to 87 yen, poised for a 20 percent tumble for this week.

Amid rising bankruptcies, the Bank of Japan yesterday said it will buy corporate bonds for the first time to stem a shortage of credit. The announcement came as Tokyo-based Aomi Construction Co. said it filed for bankruptcy protection because of a customer’s failure.

With banks tightening lending, bankruptcies among Japan’s listed companies reached 33 last year, an annual postwar record, according to Tokyo Shoko Research Ltd. Nine more companies have gone bust this year, with six of them in real estate and construction industries.

Tires, Oil

Bridgestone sank 6.3 percent to 1,266 yen, driving its peers to the biggest drop among 33 industry groups on the Topix. The company yesterday said net income will probably fall 71 percent to 3 billion yen ($32 million) this year as demand for new cars wanes.

Inpex gained 2.8 percent to 673,000 yen. Crude oil for March delivery soared 14 percent to $39.48 a barrel in New York after a U.S. government report showed an unexpected decline in inventories. A measure of six primary metals traded in London rose 1.5 percent.

Nikkei futures expiring in March retreated 0.9 percent to 7,500 in Osaka and Singapore.

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

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Australia Stocks: Caltex, Gloucester Coal, Macquarie, Perpetual

By Shani Raja

Feb. 20 (Bloomberg) -- Australia’s S&P/ASX 200 Index dropped 1.6 percent to 3,394.80 as of 12:45 p.m. in Sydney, the lowest since Jan. 23. The following were among the most active shares in the Australian market today. Stock symbols are in parentheses after company names.

Financial stocks: The Standard & Poor’s 500 Financials Index retreated 5.2 percent in New York to its lowest level since January 1995, after Fitch Ratings said credit-card defaults are about to surpass a previous high of 7.53 percent as people losing jobs fail to repay debt. Defaults may reach as high as 11 percent of loans by yearend, according to a Goldman Sachs Group Inc. analyst.

Macquarie Group Ltd. (MQG AU), Australia’s largest investment bank, slumped 6 percent to A$20.57, the lowest since Oct. 18, 2002. National Australia Bank Ltd. (NAB AU), the nation’s biggest lender by assets, slipped 2.8 percent to A$17.88. Separately, Goldman Sachs cut its recommendation on National Australia’s stock to “hold” from “buy.”

Caltex Australia Ltd. (CTX AU) tumbled 10 percent to A$8.64, the benchmark’s second-biggest loser. The nation’s largest oil refiner said full-year profit plunged 95 percent as production fell and a drop in the price of crude cut the value of stockpiles.

Gloucester Coal Ltd. (GCL AU), an Australian producer of the fuel, surged 4.3 percent to A$3.42, the most since Jan. 29. The company agreed to acquire Whitehaven Coal Ltd. for A$545 million ($351 million) in shares, adding five mines that supply power stations and a stake in an export terminal project.

Perpetual Ltd. (PPT AU), an Australian fund manager, plunged 8.3 percent to A$24.50, the lowest since June 2000, after the company’s rating was cut to “sell” from “hold” at Citigroup Inc. Perpetual said on Feb. 18 that first-half profit fell 84 percent on investment losses and customer withdrawals.

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

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