Inpex Leads Japan Energy Stocks Lower After Oil Drops

By Megumi Yamanaka and Toshiro Hasegawa

March 3 (Bloomberg) -- Inpex Corp., Japan’s largest oil explorer, dropped for a second day, leading declines among the country’s energy companies after a plunge in crude prices.

Inpex fell 5.8 percent, to close at 589,000 yen in Tokyo, outpacing the 1.1 percent decline in the benchmark Topix index. Nippon Oil Corp., Japan’s biggest refiner, dropped 5.7 percent to close at 428 yen, the biggest decline since Feb. 2,. Nippon Mining Holdings Inc., a refiner and Japan’s biggest copper producer, declined 4.2 percent to close at 320 yen.

Oil traded near $40 a barrel in New York after losing 10 percent yesterday on signs the recession in the world’s largest energy consuming economies is deepening. The future traded at $40.21 at 3:44 p.m. in Tokyo. Mining and oil companies were the two worst performing groups on the benchmark Topix index.

“Oil could drop to the mid-$30s again,” Takeshi Okada, general manger at Mitsui & Co.’s Energy Risk Management Department, said by phone in Tokyo today. “The difficulties in the global economy are now being highlighted.”

To contact the reporters on this story: Megumi Yamanaka in Tokyo at myamanaka@bloomberg.net; Toshiro Hasegawa at thasegawa6@bloomberg.net.

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Malaysia’s Export Slump Signals Weaker Ringgit Ahead

By David Yong

March 3 (Bloomberg) -- Malaysia’s export slump suggests the nation’s currency will weaken from a three-year low as the world’s biggest economies struggle with the deepening recession, according to the Federation of Malaysian Manufacturers.

The ringgit has weakened 6.9 percent this year after Bank Negara Malaysia last week said a collapse in overseas shipments could tilt the economy into a contraction this year for the first time since the Asian financial crisis in 1998. Malaysia’s exports tumbled 14.9 percent in December as economic growth almost stalled in the final quarter of 2008.

“There’s a credit squeeze in importing countries like the U.S., so demand for merchandize goods is just not there,” Paul Low Seng Kuan, vice president of the federation, said in a phone interview from Kuala Lumpur yesterday. “The ringgit can even go weaker. I don’t want to speculate to what level, but the environment is weak and it doesn’t favor the ringgit.”

The ringgit rose 0.6 percent to 3.7075 against the U.S. dollar as of 2 p.m. in Kuala Lumpur, on speculation the central bought its own currency to stem its slide. The currency reached 3.7350 today, the lowest since February 2006, according to data compiled by Bloomberg.

Low said exporters, who make up most of the federation’s membership, are running down inventories, and cutting back on purchases of raw materials to cope with the downturn. Lowering selling prices isn’t helping as “demand for merchandize goods has continued to get worse,” he said.

Getting Worse

Malaysia’s gross domestic product grew 0.1 percent in the final quarter of last year, the slowest pace since the third quarter of 2001, the central bank said on Feb. 27. The government will revise its GDP forecast of 3.5 percent growth for 2009 on March 10 when Deputy Prime Minister Najib Razak unveils a second fiscal stimulus program.

Malaysia’s trade ministry will report January’s data on March 6. Exports plunged 24.6 percent from a year ago, according to a Bloomberg survey, the most since December 1993. Similar indicators tumbled in January in Singapore and Taiwan, government reports showed last month.

Singapore’s economy shrank 16.4 percent in the same period, while the U.S. contracted 6.2 percent. Singapore, the U.S. and Japan accounted for 38 percent of Malaysia’s 663.5 billion ringgit ($178 billion) of exports in 2008.

“The weakening ringgit is actually good news for exporters,” said Low, who is also the managing director of Malaysian Sheet Glass Sdn., a Kuala Lumpur-based of automotive glass maker controlled by Japan’s Nippon Sheet Glass Co. “They are more concerned about the lack of orders. It’s not an issue of selling price alone. There’s just no demand.”

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

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Australian Dollar Rises as RBA Unexpectedly Halts Rate Cuts

By Candice Zachariahs and Theresa Barraclough

March 3 (Bloomberg) -- Australia’s dollar rose against the greenback after the central bank unexpectedly left borrowing costs unchanged, halting its most aggressive round of interest- rate cuts. New Zealand’s dollar rose from near a 6 1/2-year low.

Australia’s dollar also advanced against the yen after the nation’s current-account deficit narrowed in the fourth quarter and retail sales rose in January, when analysts had forecast a decline. The nation’s economy probably expanded 0.2 percent in the fourth quarter, data to be released tomorrow will show, according to a Bloomberg survey of 23 economists.

“In the short-term the Aussie dollar should sustain this bounce, because people will quickly turn to the GDP numbers tomorrow,” said Sean Callow, a Sydney-based currency strategist at Westpac Banking Corp., Australia’s fourth-largest bank by assets. “It looks like it will be a positive number, which in global terms is unique.”

Australia’s currency rose 0.8 percent to 64.01 U.S. cents as of 4:31 p.m. in Sydney, from late in Asia yesterday. The currency earlier fell as low as 62.87 U.S. cents, the weakest since Feb. 3. It advanced 1.3 percent to 62.39 yen.

New Zealand’s dollar advanced 0.4 percent to 49.66 U.S. cents, after touching 49.17 cents earlier, close to its lowest since November 2002. It bought 48.38 yen from 48.05 yen.

“It seems like the RBA will be on hold for the next couple of months,” said Katie Dean, a senior economist at Australia & New Zealand Banking Group Ltd. in Melbourne.

Interest Rates

Governor Glenn Stevens kept the overnight cash rate target at 3.25 percent, a move forecast by four of 18 economists surveyed by Bloomberg News. Seven expected a half-point reduction and seven tipped a quarter-point cut.

Stevens lowered the benchmark by four percentage points between September and February.

The shortfall on goods, services and investment shrank in Australia to A$6.49 billion ($4.1 billion) from a revised A$9.47 billion in the third quarter. The median estimate in a Bloomberg News survey of 18 economists was for a current account deficit of A$7.35 billion.

Retail sales, seasonally adjusted, advanced 0.2 percent from December, compared with the median forecast of 19 economists surveyed by Bloomberg News for a 0.5 percent drop.

“The data highlights the fact that the Australian economy is better placed than other major economies around the world,” said Besa Deda, chief economist at St. George Bank Ltd. in Sydney. The Australian dollar may advance toward 64 U.S. cents “before losing steam,” she said.

Rates, Stocks, Commodities

Higher interest rates in Australia and New Zealand, compared with 0.1 percent in Japan and as low as zero in the U.S., attract investors to the South Pacific nations’ assets. The Reserve Bank of New Zealand is forecast to trim its target rate by 75 basis points to 2.75 percent on March 12, according to a separate survey.

The Australian dollar has dropped 26 percent since the central bank began lowering rates from a 12-year high in September and fell as low as 60.10 U.S. cents in October.

The currency “has probably seen the bottom of this cycle and is likely to grind higher,” wrote Richard Grace, chief currency strategist at the Commonwealth Bank of Australia in Sydney.

The Australian and New Zealand dollars fell earlier as equities dropped worldwide after American International Group Inc. posted the worst corporate loss in U.S. history and HSBC Holdings Plc said it needed to raise capital, triggering the worst plunge in U.K. banks since at least 1985.

Commodity Exports

Commodity exports, which generate 60 percent of Australian overseas sales, will fall in fiscal 2010 for the first time in six years, according to an Australian government report today. Commodity exports may drop 17 percent from a record to A$162 billion in the 12 months ending June 30, 2010, the Canberra- based Australian Bureau of Agricultural and Resource Economics said today in a report.

The worst of the global financial crisis has passed and growth may return by the end of the year, Andrew Burns, lead economist at the World Bank’s development prospects group, said today at the ABARE conference.

Australian government bonds reversed gains after the rates decision. The yield on 10-year notes added one basis point, or 0.01 percentage point, to 4.31 percent, after touching 4.19 percent earlier, according to data compiled by Bloomberg. The price of the 5.25 percent security due March 2019 slipped 0.01, or A$0.10 per A$1,000 face amount, to 107.60.

New Zealand’s two-year swap rate, a fixed payment made to receive floating rates, fell to 3.24 percent from 3.25 percent yesterday.

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

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Indonesian Rupiah Advances as Investors Judge Losses Excessive

By Lilian Karunungan

March 3 (Bloomberg) -- Indonesia’s rupiah rose, reversing losses, on speculation investors judged recent declines excessive, given the central bank is supporting the currency.

The rupiah advanced as a technical indicator showed the Bloomberg-JPMorgan Asia Dollar Index, which tracks 10 of Asia’s most-traded currencies excluding the yen, may reverse a drop. Indonesia’s currency also strengthened on speculation the central bank will intervene to limit losses. Nine of the 10 currencies gained against the dollar today.

“We’ve seen a lot of profit-taking in dollar-Asia,” said Thomas Harr, a senior currency strategist in Singapore at Standard Chartered Plc. “That is also spilling into Indonesian markets. We are seeing some selling of dollars because the market has to some extent been caught long dollar-Asia.” Long positions are bets an asset’s value will rise.

The rupiah strengthened 0.5 percent to 12,020 per dollar as of 1:26 p.m. in Jakarta, according to data compiled by Bloomberg. It tumbled to 12,300 yesterday, the weakest since Feb. 18, and has weakened 9.3 percent this year.

The 14-day relative strength index of the Asia Dollar Index reached 21.92 yesterday before rising to 31 today. A level below 30 or above 70 shows a security may reverse direction. In technical analysis, investors and analysts study charts of trading patterns and prices to forecast price changes in a security, commodity, currency or index.

RBA Decision

“The central bank has been offering dollars in the market,” said Iwan Ridwan Gunandar, a currency trader at PT Bank CIMB Niaga in Jakarta. “Foreign banks have also been selling dollars to get rupiah.”

The rupiah also advanced after the Reserve Bank of Australia unexpectedly left borrowing costs unchanged today, halting its most aggressive interest-rate cuts.

“The RBA decision to keep interest rates on hold probably added to the bullish sentiment for Asian currencies because there was a feeling that maybe the worst is over,” Standard Chartered’s Harr said.

Non-deliverable forwards contracts signal traders are betting the rupiah will fall 3.3 percent to 12,410 per dollar in a month, compared with expectations for a rate of 12,588 yesterday. Forwards are agreements in which assets are bought and sold at current prices for delivery at a future specified time and date.

Central banks intervene by arranging purchases or sales of currencies to influence exchange rates.

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

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Dollar, Yen Weaken as RBA Rate Decision Boosts Demand for Yield

By Ron Harui and Theresa Barraclough

March 3 (Bloomberg) -- The dollar and the yen fell after Australia’s central bank unexpectedly halted the country’s most aggressive round of interest-rate cuts, boosting demand for higher-yielding assets.

The U.S. and Japanese currencies also snapped two days of gains versus the euro as Asian shares pared losses and U.S. stock futures climbed, increasing confidence among investors to resume so-called carry trades. Currencies of economies with higher relative interest rates, such as Australia, New Zealand, China and the Philippines, all strengthened.

“Investors have no alternative but to look abroad because their domestic rates aren’t high,” said Akifumi Uchida, deputy general manager of the marketing unit in Tokyo at Sumitomo Trust & Banking Co., Japan’s fifth-largest bank. “Recently, some appear to be buying assets in Asia as the performance of those assets is relatively good.”

The dollar declined to $1.2654 per euro as of 6:31 a.m. in London from $1.2578 late in New York yesterday. The yen dropped to 123.41 per euro from 122.58. The U.S. currency traded at 97.54 yen from 97.45 yen.

Australia’s currency rose 1.8 percent to 64.12 U.S. cents and advanced 1.9 percent to 62.54 yen from late in New York yesterday. New Zealand’s dollar climbed 1.1 percent to 49.79 cents and added 1.2 percent to 48.59 yen. Against Japan’s currency, China’s renminbi rose 0.1 percent to 14.251 and the Philippine peso climbed 0.4 percent to 1.999.

Buying Yuan

Selling Japan’s currency today for the Chinese yuan may provide a total return of 3 percent this year, based on Bloomberg calculations using analyst exchange-rate forecasts and the difference between the two nations’ interest rates.

The Reserve Bank of Australia left the overnight cash target at 3.25 percent at today’s meeting. Only four of 18 economists surveyed by Bloomberg News forecast the decision, with the remainder expecting a reduction.

Demand for higher-yielding currencies was also supported by speculation a government report tomorrow will show Australia’s gross domestic product rose 0.2 percent last quarter from the prior three months.

“In the short-term, the Aussie dollar should sustain this bounce because people will quickly turn to the GDP number tomorrow,” said Sean Callow, a Sydney-based currency strategist at Westpac, Australia’s fourth-largest bank by assets. “It looks like it will be a positive number, which in global terms is unique.”

Benchmark rates are 0.1 percent in Japan and as low as zero in the U.S., compared with 3.25 percent in Australia and 3.5 percent in New Zealand, encouraging investors to borrow in Japan and the U.S. and invest in higher-yielding assets elsewhere. China’s interest rate is at 5.31 percent and the Philippines benchmark is 5 percent.

Worst is Over

The U.S. currency weakened versus 14 of the 16 major currencies after the World Bank said the worst of the global financial crisis has passed, reducing demand for the greenback as a shelter from the turmoil.

“The period of acute financial crisis is behind us,” Andrew Burns, lead economist at the World Bank’s development prospects group, said today at the Australian Bureau of Agricultural and Resource Economics conference in Canberra. “Now we are moving forward under weaker conditions but growth will come back and we expect that toward the end of this year.”

Gains in the euro may be limited before a government report later today that economists say will show Germany wholesale prices slid 2 percent in January, the sixth consecutive month of declines. Europe is being dragged into its deepest recession since World War II as the global financial crisis derails purchases of cars and factory machinery, forcing companies to reduce output and cut jobs.

‘Aggressive Stance’

“The euro-zone economy remains under considerable stress and the additional decline in inflation will enable the ECB to apply a more aggressive stance on monetary policy,” wrote analysts led by Mansoor Mohi-Uddin, chief currency strategist in Zurich at UBS AG, in a research note yesterday. “We expect the euro to remain under pressure, in particular versus the dollar.”

Investors boosted bets the European Central Bank will lower its 2 percent benchmark rate at its March 5 meeting. The yield on the three-month Euribor interest-rate futures contract due in March was at 1.655 percent today from 1.7 percent a week ago.

The dollar also declined for the first time in three days against the euro before U.S. reports this week on housing and employment that may add to signs the world’s largest economy is sinking deeper into recession.

“The market is starting to realize again that the situation in the U.S. is far more deeply rooted than in Japan,” said Daisuke Uno, chief bond and currency strategist at Sumitomo Mitsui Banking Corp. in Tokyo. “The focus is now on all the bad news, especially with the jobs data coming up, which will increase dollar selling pressure.”

Deepening Recession

The dollar also fell before a National Association of Realtors report that may show its index of pending home sales dropped 3.5 percent in January after a 6.3 percent increase in December, according to a Bloomberg News survey. Companies in the U.S. cut an estimated 630,000 jobs in February, economists surveyed by Bloomberg predict the ADP Employer Services gauge will show tomorrow.

The Dollar Index, which tracks the greenback versus the euro, yen, pound, Swiss franc, Canadian dollar and Swedish krona, declined to 88.615 from 88.940 yesterday when it reached 89.003, the strongest since April 2006.

The MSCI Asia Pacific Index for regional shares pared losses, declining 0.2 percent, after earlier sliding as much as 1.7 percent. Futures on the Standard & Poor’s 500 Index advanced 1.2 percent.

U.S. Slump

The world’s largest economy will likely shrink at an annual pace of 7 percent this quarter and 3 percent next quarter, Edward McKelvey, a New York-based senior economist at Goldman Sachs Group Inc., wrote in a research note yesterday. The forecasts compare with previous predictions for declines of 4.5 percent and 1 percent, respectively.

“The risks to our expectations for near-term U.S. economic activity swung sharply to the downside last week,” McKelvey wrote, citing factors such as the Commerce Department’s report on Feb. 27 that showed the economy contracted at a larger-than- expected annual pace of 6.2 percent last quarter.

To contact the reporter on this story: Theresa Barraclough in Tokyo at tbarraclough@bloomberg.net; Ron Harui in Tokyo at rharui@bloomberg.net.

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Oil Trades Near $40 as Investors Buy Futures to Gain From Fall

By Christian Schmollinger

March 3 (Bloomberg) -- Crude oil was little changed near $40 a barrel after prices rose as traders closed out bets that prices would decline amid the global recession.

Prices have fallen 11 percent since climbing to $45.22 a barrel on Feb. 26 after data releases showed the U.S., Chinese and Japanese economies are contracting. The countries are the top oil consumers. Crude has traded between a low of $33.87 a barrel and a high of $48.81 since Dec. 15.

“Crude oil has been moving within a narrow range,” said Ken Hasegawa, a commodity derivative sales manager at Newedge Group in Tokyo. “That makes it difficult to have a long-term position. So a short-term strategy is to sell at the high of $45 and buy back at $40 or so.”

Crude oil for April delivery was at $40.24 a barrel, up 9 cents, in electronic trading on the New York Mercantile Exchange at 2:18 p.m. Singapore time. The contract traded as much as 1.1 percent higher at $40.60 a barrel today and fell as much as 1.8 percent to $39.44 a barrel.

Yesterday, futures plunged $4.61, or 10 percent, to settle at $40.15 a barrel, the biggest one-day drop since Jan. 7, after global equity markets slumped on reports of manufacturing declines in China and the U.S. Prices are down 9.4 percent so far this year.

“The economy continues to be a drag on oil fundamentals,” said Victor Shum, a senior principal at consultants Purvin & Gertz Inc. in Singapore. “I think that $40 remains a rather strong level to support prices.”

Equities Slump

The Nikkei 225 Stock Average declined as much as 2.6 percent, set for the lowest close since October 1982. The MSCI Asia Pacific Index dropped 1.2 percent to 71.63, set for its weakest finish since August 2003, at 10:20 a.m. in Tokyo.

The Dow Jones Industrial Average declined 299.64 points, or 4.2 percent, to 6,763.29 yesterday. The Standard & Poor’s 500 Index dropped 34.27 points, or 4.7 percent, to 700.82.

Brent crude oil for April settlement was at $42.15 a barrel on London’s ICE Futures Europe exchange at 2:13 p.m. Singapore time. The contract traded between $42.56 a barrel and $41.60 a barrel today. It declined $4.14, or 8.9 percent, to end the session at $42.21 a barrel yesterday.

Commodities yesterday had the biggest drop since October as the deepening global recession slashed demand. The Reuters/ Jefferies CRB Index of 19 raw materials fell 11.23, or 5.3 percent, to 200.34, the biggest decline since Oct. 10. The 6.6 percent decrease on that date was the largest since the debut of the index in 1956.

U.S. Stockpiles

U.S. oil supplies probably rose last week as imports climbed and refineries ramped up operating rates, a Bloomberg News survey showed.

Crude-oil stockpiles increased 1 million barrels in the week ended Feb. 27 from 351.3 million the week before, according to the median of eight estimates by analysts.

“With OPEC cutting and the refiners operating at low levels, any builds that we’re seeing are really indicating poor demand,” said Purvin & Gertz’s Shum.

Refineries probably operated at 81.9 percent of capacity, up 0.5 percentage point from the week before, the survey showed.

Gasoline stockpiles probably dropped 750,000 barrels from 215.3 million in the prior week, according to the survey. Supplies of distillate fuel, a category that includes heating oil and diesel, probably fell 1.35 million barrels from 141.6 million.

The Energy Department is scheduled to release its weekly report on March 4 at 10:30 a.m. in Washington.

OPEC Comments

Officials from the Organization of Petroleum Exporting Countries, the supplier of 40 percent of the world’s oil, gave conflicting signals on their intentions to cut output further when they meet in Vienna on March 15.

The group “will likely” reduce supplies to support prices, Algerian Oil Minister Chakib Khelil said in an interview in Madrid yesterday. Earlier this week, Iran’s oil minister said OPEC is unlikely to lower crude production when it meets.

OPEC members have reached almost 100 percent compliance with existing cuts at the end of February, Khelil said. The group has implemented as much as 80 percent of previously announced supply cuts, preventing a sharp fall in the oil price, Iranian Oil Minister Gholamhossein Nozari said in comments posted March 1 on the Web site of state-run Iranian Students News Agency.

“I don’t think that OPEC will cut because they aren’t making any revenue at the current low level of sales,” said said Tetsu Emori, a commodity fund manager at Astmax Ltd. in Tokyo. “If they cut further, they’ll be making even less.”

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

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Albidon Halts Zambia’s Biggest Nickel Mine After Price Slumps

By Jesse Riseborough

March 3 (Bloomberg) -- Albidon Ltd., the Australian nickel producer backed by China’s Jinchuan Group Ltd., suspended output at Munali, Zambia’s biggest nickel mine, after the price of the metal slumped 56 percent since its July opening.

“Depressed nickel prices have made ongoing operations at Munali unsustainable,” Perth-based Albidon said today in a statement to the Australian stock exchange.

Albidon, which had agreed to sell all output from the $124 million Munali mine to Jinchuan, had forecast production of 10,500 metric tons a year from 2010 to 2017. The mine is located 60 kilometers (37 miles) south of the capital Lusaka.

Jinchuan, owner of 18.4 percent of Albidon and the largest nickel producer in Asia, has offered a funding package to allow the company to continue to operate, it said.

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

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Asia Aluminum Plans New Tactic to Gain Support for Bond Buyback

By Tom Kohn

March 3 (Bloomberg) -- Asia Aluminum Holdings Ltd. Chairman Kwong Wui Chun, who offered his shares to investors to win support for a restructuring plan and debt buyback offer, now plans to shock bondholders into agreement.

“I want to present the real difficulty that the company is facing,” Kwong said in an interview in Hong Kong yesterday. “I want to give investors a picture of the situation” by sharing a liquidation analysis report prepared by a consulting firm, he said, without naming the company.

Kwong on Feb. 27 sent a letter to investors offering his shares in Asia Aluminum’s parent if investors accept a bond buyback offer and guarantee that the company won’t go into liquidation, employees won’t be fired and banks and suppliers won’t suffer losses.

Asia Aluminum, the region’s biggest maker of extruded aluminum, on Feb. 13 offered to pay as much as 27.5 cents on the dollar for its 8 percent notes due 2011 while parent AA Investments Co. offered 13.5 cents for pay-in-kind notes as part of a “crucial” restructuring. Trade association EMTA and Aberdeen Asset Management Plc on Feb. 26 hosted a call for holders of the 8 percent notes in which all participants agreed not to sell at the offer price, according to Bondcritic.com analyst Warut Promboon.

Since the offer, customers have threatened cancellations and suppliers who previously extended credit have demanded cash, Kwong said. Deputy Chairman and Chief Executive Officer Benby Chan Yiu Tsuan resigned “to pursue his own interests,” the company said in a filing yesterday.

‘Peanuts’

A buyback at the offer price would mean bondholders get “peanuts” while shareholders and bank lenders “walk away with a much lighter debt burden,” according to Dubai-based investor Sami Caracand, who said he and his family own $250,000 of the 8 percent notes.

Standard & Poor’s cut Asia Aluminum’s credit rating by five grades to CC on Feb. 16 after the company said a slump in sales and cashflow coincided with a need to finance factory production and pressure on working capital. Investors have until May 18 to accept the buyback, with an “early consent” date on March 10.

Kwong tried in vain to sell parts of Asia Aluminum for more than a year and fought to avoid bankruptcy because of his concern for the future of the company’s 10,000 workers in southern China, he said.

Asia Aluminum has said it aims to get help from a Chinese municipal government to fund its buyback and has letters of intent from China Construction Bank Corp. and Bank of China Ltd. to provide loans if the tender is successful.

To contact the reporter for this story: Tom Kohn in Hong Kong at tkohn@bloomberg.net

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Australian Wheat Exports Forecast to Jump 44%, Bureau Says

By Madelene Pearson

March 3 (Bloomberg) -- Wheat exports from Australia, the world’s fourth-largest shipper, may jump 44 percent in fiscal 2010 because of increased local supplies, the nation’s key commodity forecaster said.

Shipments may rise to 14.7 million metric tons in the 12 months ending June 30, 2010, the Canberra-based Australian Bureau of Agricultural and Resource Economics said today in a report. That compares with 10.2 million tons a year earlier. Production may gain 3.3 percent, it said.

The predicted jump in shipments comes as global prices are forecast to fall 5 percent, the bureau said. Australia last year ended its monopoly on wheat exports, giving 22 traders including Cargill Inc. and Glencore International AG, permission to sell the grain overseas.

“The outlook for global wheat prices is not that favorable at the moment,” Doug Whitehead, agricultural commodity strategist at Australia and New Zealand Banking Group Ltd., said before the report was released. “We’ve got abundant stocks and exportable surpluses in a lot of regions and that should cap any increase in the global grain price.”

World inventories, already at six-year high, will rise for a second year in fiscal 2010, the bureau said. The world wheat indicator price may fall about 5 percent to average $248 a ton in the year ending June 30, 2010, it said.

Australia’s wheat production may rise to 22.1 million tons in 2009-2010, from 21.4 million tons a year earlier, the forecaster said, after drought cut production in the previous two harvests. Global output may fall to 632 million tons, down from a record 687 million tons a year earlier, it said.

Australia’s total farm export earnings are tipped to rise 4 percent to A$32.1 billion ($20 billion) in 2009-2010 aided by a gain in sales from wheat, the bureau said.

To contact the reporter on this story: Madelene Pearson in Canberra on mpearson1@bloomberg.net

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Australia May Boost Gold Output 17% Over 4 Years, Bureau Says

By Rebecca Keenan

March 3 (Bloomberg) -- Gold output in Australia, the world’s third-largest producer, will increase 17 percent during the next four years as investors boost purchases amid the global recession.

Output is forecast at 264 metric tons in the year ending June 30, 2012, the Canberra-based Australian Bureau of Agricultural and Resource Economics said today. Output this fiscal year may 225 tons, the bureau said.

Gold, the best-performing metal in 2008, was one of only four commodities to rise when the Reuters/Jefferies CRB Index fell 36 percent, the worst year in a half-century. Demand for gold bars, coins and other physical products this year has been strong, the bureau said, pushing the price up 8 percent.

Australian gold exports are forecast to rise 59 percent to A$17.3 billion ($11 billion) in the year ending June 30, after increases in output and prices, the bureau said. Gold for immediate deliveries may average $910 an ounce this year and $940 an ounce the following year, it said.

Global output of gold may increase 3 percent this year to 2,464 tons, the bureau said.

To contact the reporter on this story: Rebecca Keenan in Melbourne at rkeenan5@bloomberg.net

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Wheat Advances from 11-Week Low as U.S. Crop Conditions Worsen

By Jae Hur

March 3 (Bloomberg) -- Wheat rebounded from an 11-week low after a government report showed the U.S. winter wheat crop deteriorated last month in Kansas, Oklahoma and Texas because of a lingering dry spell.

About 50 percent of plants in Kansas were rated good or excellent at the end of February, down from 59 percent at the end of January, the Department of Agriculture said yesterday in a report. About 23 percent of the Oklahoma crop got the top ratings, down from 24 percent, and the Texas crop was rated 10 percent good or excellent, down from 12 percent, the USDA said.

“Prices should derive a degree of support from the extremely poor condition of the U.S. winter wheat crop,” Toby Hassall, an analyst with Commodity Warrants Australia in Sydney, said by e-mail today.

May-delivery wheat gained as much as 0.8 percent to $5.10 a bushel in electronic trading on the Chicago Board of Trade and was at $5.095 at 10:39 a.m. Singapore time. The contract lost 3 percent yesterday after touching $5.0275, the lowest for a most- active contract since Dec. 12. Futures are down 62 percent from a record $13.495 a year earlier.

Grain and oilseed prices in Chicago dropped yesterday as tumbling global equities signaled a deepening recession. The Dow Jones Industrial Average fell below 7,000 for the first time since 1997. The Reuters/Jefferies CRB Index of 19 raw materials fell 5.3 percent.

Dollar Gains

“Until we see an equity market rebound it is unlikely that Chicago grains and oilseed prices will see much upside,” Hassall said. “There are no signs that the weak demand outlook is improving. Furthermore, the collapse in equities is driving an appreciation of the dollar which hurts dollar-denominated commodity prices.”

Corn for May delivery rose 0.2 percent to $3.51 a bushel at 10:43 a.m. Singapore time after declining 2.4 percent yesterday. Futures have fallen 56 percent from a record $7.9925 on June 27.

Soybeans for May delivery rose 0.5 percent to $8.48 a bushel after declining 3.2 percent yesterday. The price is down 48 percent from a record $16.3675 on July 3.

Crude oil for April delivery rose 0.2 percent to $40.22 a barrel after dropping 10 percent yesterday. The dollar was at $1.2597 per euro as of 10:20 a.m. in Singapore from $1.2578 late yesterday in New York.

To contact the reporter on this story: Jae Hur in Singapore at jhur1@bloomberg.net

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Hong Kong Shares Drop to Four-Month Low; HSBC Leads Decline

By Patrick Rial

March 3 (Bloomberg) -- Hong Kong stocks dropped, dragging the Hang Seng Index to the lowest level since October, after HSBC Holdings Plc announced plans to raise new capital through a rights offer.

HSBC, Europe’s largest bank by market value, plummeted 19 percent, as investments in subprime lending eroded profit. Financial stocks also declined after insurer American International Group Inc. reported a record loss for a U.S. company. Angang Steel Co., China’s second-largest steelmaker, jumped 8.4 percent ahead of the nation’s annual legislative meeting, where details of a stimulus package will be released.

“The earnings reports from HSBC and AIG yesterday are resurrecting fears about the stability of the financial system,” said Michiya Tomita, a Hong Kong-based fund manager of Chinese stocks at Mitsubishi UFJ Asset Management Co., which oversees $61 billion. “The government will outline proposals at the meeting this week, which paves the way for stimulus projects to begin.”

The Hang Seng Index slumped 224.97, or 1.8 percent, to 12,092.49 as of 2:52 p.m. local time, paring losses of as much as 3.8 percent. HSBC accounted for most of the decline, with the gauge headed for its lowest close since Oct. 27. The Hang Seng China Enterprise Index, which tracks so-called H-shares, rebounded from a 2.7 percent slide to add 0.8 percent to 6,634.10.

The benchmark Hang Seng Index has lost 16 percent this year, dragging its valuation to 9.8 times estimated earnings, down from 18.7 times at the beginning of 2008.

HSBC tumbled 19 percent to HK$46.40, the biggest decline since Black Monday in October 1987. The company plans to raise 12.5 billion pounds ($17.5 billion) by selling current investors five shares for every 12 they already own.

Hang Seng Bank

The bank said yesterday net income fell 70 percent last year to $5.73 billion, missing analysts’ estimates. It also slashed its dividend and said it will cut 6,100 jobs.

Hang Seng Bank Ltd., majority owned by HSBC Holdings Plc, lost 3.3 percent to HK$81.50 after Credit Suisse Group AG cut the stock to “neutral” from “outperform.” The bank announced yesterday that second-half profit dropped 46 percent to HK$5.04 billion ($650 million) because of lower fee income. BOC Hong Kong Holdings Ltd., the city’s largest bank, slid 4.1 percent to HK$7.29.

AIG yesterday reported a $61.7 billion quarterly loss, prompting the U.S. government to offer a package of equity, new credit and lower interest rates on existing loans.

Annual Meeting

Angang Steel jumped 8.4 percent to HK$6.84. Maanshan Iron & Steel Co., China’s fourth-largest steelmaker by value, rallied 7.4 percent to HK$2.31. Materials suppliers gained as investors sought companies expected to benefit from the government’s infrastructure spending.

China’s leaders are scheduled to provide details of economic stimulus plans at the annual meeting of the National People’s Congress in Beijing where they will also report on the outlook for 2009. The congress meets Thursday. Stephen Green, Shanghai-based head of China research at Standard Chartered, said China may double its 4 trillion yuan ($585 billion) proposed stimulus package at the meeting.

Pacific Basin Shipping Ltd., Hong Kong’s largest operator of commodity vessels, fell 8.4 percent to HK$3.17. Profit dropped 13 percent last year to $409.1 million, the shipping line said yesterday.

About two stocks rose for each that fell on the 42-member Hang Seng Index. March futures were little changed at 12,092.

The following stocks rose or fell. Stock symbols are in parentheses after company names.

Aluminum Corp. of China Ltd. (2600 HK) climbed 3.7 percent to HK$3.68. The publicly traded unit of the nation’s biggest producer of the metal was raised to “hold” from “sell” by Deutsche Bank AG’s Julian Zhu on the view that margins are likely to start improving, leading to better earnings in 2010.

Anhui Conch Cement Co. (914 HK) soared 6.6 percent to HK$34.10. China’s biggest cement producer was lifted to “buy” from “sell” at Deutsche Bank as demand for cement is set to rebound in the second quarter of this year amid rising government infrastructure spending.

Hutchison Telecommunications International Ltd. (2332 HK) added 1.5 percent to HK$2.05. The emerging-markets phone carrier controlled by billionaire Li Ka-shing was lifted to “overweight” from “equal weight” at Morgan Stanley on speculation moves to restructure the company will benefit shareholders.

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

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Japan Stocks Decline on Recession Concern; Inpex Drops on Oil

By Masaki Kondo

March 3 (Bloomberg) -- Japanese shares declined, pushing the Nikkei 225 Stock Average to the brink of a quarter-century low, on concern the deepening recession will diminish demand for commodities and spark new financial losses.

Inpex Corp. and Japan Petroleum Exploration Co., the nation’s biggest oil explorers, retreated almost 6 percent as crude prices tumbled. Tokio Marine Holdings Inc., Japan’s No. 1 casualty insurer, lost 2.8 percent as American International Group Inc. posted the worst quarterly loss in U.S. history, prompting the government to inject more aid. Nomura Holdings Inc. and Sony Corp. reversed losses to surge more than 3.9 percent.

The Nikkei 225 fell 50.43, or 0.7 percent, to close at 7,229.72 in Tokyo, after losing as much as 2.6 percent to the lowest closing level since October 1982. The broader Topix index lost 7.79, or 1.1 percent, to 726.80, the lowest since December 1983, with more than two shares falling for each that gained.

“Earnings will continue to deteriorate, with companies likely posting one-time losses on restructuring and writedowns,” said Mitsushige Akino, who oversees about $615 million at Tokyo- based Ichiyoshi Investment Management Co. “With diminishing auto sales and the spread of hybrid and electric cars, demand for oil will be much smaller than people have hoped.”

Shares pared losses, and the Nikkei briefly rose, after Japanese Finance Minister Kaoru Yosano said the government can’t ignore “excessive declines” in the stock market. Yosano said on Feb. 26 that he ordered a study into ways to bolster equities.

Global Rout

The Nikkei has fallen 18 percent in 2009, extending last year’s record 42 percent dive as recessions in the world’s largest economies and global financial turmoil decimated corporate earnings. Japanese banks including Mitsubishi UFJ Financial Group Inc. and Mizuho Financial Group Inc. have slashed annual profit targets in part because of increasing writedowns on stockholdings.

In New York, the Dow Jones Industrial Average tumbled 4.2 percent to below 7,000 for the first time since 1997. Europe’s Dow Jones Stoxx 600 Index slid 5 percent to the lowest close in six years after HSBC Holdings Plc, the region’s biggest bank by value, said it plans to raise $17.7 billion and shed 6,100 jobs.

The Institute for Supply Management yesterday said its U.S. factory index stayed at 35.8 last month, below the 50 threshold that divides expansion and contraction. The gauge has remained below 50 since February 2008.

Oil, Copper

Concern a deeper economic slump will diminish energy demand sent oil futures down 10 percent in New York yesterday to $40.15 a barrel, the sharpest drop since Jan. 7. A measure of six primary metals traded in London fell 2.2 percent. Oil rebounded as much as 1.1 percent today.

Inpex tumbled 5.8 percent to 589,000 yen, bringing its two- day decline to 13 percent, while Japan Petroleum fell 5.8 percent to 3,230 yen. Nippon Mining Holdings Inc., the nation’s largest copper producer, sank 4.2 percent to 320 yen. Mitsui & Co., a trading company that earns more than half its profit from commodities, slid 6.6 percent to 827 yen, making it the No. 2 loser on the Nikkei.

Gauges tracking oil explorers, refiners and trading houses posted the steepest drops among the Topix’s 33 industry groups.

Tokio Marine, which chopped its full-year earnings forecast by 88 percent last month on investment losses, dived 2.8 percent to 2,070 yen. Aioi Insurance Co. slipped 4.3 percent to 333 yen, and Sompo Japan Insurance Inc. slid 4.1 percent to 441 yen.

AIG yesterday said its fourth-quarter loss widened to $61.7 billion from $5.29 billion a year earlier. The New York-based insurer will get as much as $30 billion in new government aid, the Treasury Department said.

Short-Selling Risk

Nomura, Japan’s biggest brokerage, advanced 3.9 percent to 451 yen, while Sony jumped 4.5 percent to 1,734 yen. The stocks lost more than 3.4 percent in early trading and were the most actively traded by value in Tokyo.

“If the government pumps public money into the market, stocks won’t drop even if spears fall from the sky,” Norihiro Fujito, senior investment strategist at Tokyo-based Mitsubishi UFJ Securities Co., wrote in a Japanese-language report yesterday. “If short-sellers become convinced the market will stay solid through the end of the month, they will unwind their positions. Short-selling now involves a huge risk.”

Nikkei futures expiring in March dipped 0.6 percent to 7,210 in Osaka and slumped 1 percent to 7,200 in Singapore.

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

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Most Asian Stocks Decline on Economic Concern; HSBC, BHP Fall

By Jonathan Burgos

March 3 (Bloomberg) -- Most Asian stocks fell, led by banks and commodity companies, as concerns about the worsening global economy countered speculation China will introduce more policies to stimulate growth.

HSBC Holdings Plc, Europe’s largest bank, plunged 19 percent in Hong Kong after announcing share-sale plans. BHP Billiton Ltd., the world’s biggest mining company, sank 2.4 percent in Sydney as oil and metals prices declined. China Life Insurance Co., the nation’s biggest insurer, added 1.5 percent in Hong Kong on speculation the government will this week boost spending to bolster the economy.

“We’re still underweight on equities but more positive on China,” said Daphne Roth, Singapore-based head of Asia equity research at ABN Amro Private Bank, which manages $27 billion of Asian assets. “Some of the most powerful stimulus have come from China. There is no rush to buy stocks because there might be another round of selling and earnings downgrades.”

Five stocks dropped for every four that advanced on the MSCI Asia Pacific Index, which lost 0.2 percent to 72.30 as of 4:33 p.m. in Tokyo. The gauge slumped 19 percent this year, extending 2008’s record 43 percent tumble, as recessions in the world’s largest economies hurt earnings at companies from BHP to Toyota Motor Corp., the world’s largest automaker.

Japan’s Nikkei 225 Stock Average slipped 0.7 percent to 7,229.72 in Tokyo, paring a decline of as much as 2.6 percent. Hong Kong’s Hang Seng Index retreated 1.8 percent. All markets open for trading declined, except South Korea, Taiwan, Singapore, the Philippines and Indonesia.

Yahoo Japan Corp., Japan’s most visited Internet portal, tumbled 9 percent after Morgan Stanley cut its recommendation on the stock. Pacific Basin Shipping Ltd., Hong Kong’s biggest dry- bulk carrier, fell 8.7 percent on lower earnings.

Record Loss

Futures on the Standard & Poor’s 500 Index added 0.9 percent. The gauge tumbled 4.7 percent yesterday to its lowest close since October 1996. Europe’s Dow Jones Stoxx 600 Index slid 5 percent to a six-year low. The MSCI Emerging Market Index fell to the lowest level in 14 weeks as European Union leaders rejected pleas for aid to eastern Europe.

The deepening global recession, a third government rescue for Citigroup Inc. and dividend cuts at companies from General Electric Co. to JPMorgan Chase & Co. have dragged the MSCI World Index to three consecutive weeks of declines. The benchmark gauge was little changed today after yesterday’s 4.9 percent tumble, which was the most since Dec. 1.

“You need to see the economic indicators stop deteriorating, and at this stage they’re still deteriorating,” said Rob Patterson, who helps manage $2 billion at Argo Investments Ltd. in Adelaide. “It’s hard for any confidence to come back in when there’s still so much negative news.”

Raising Funds

AIG yesterday said its fourth-quarter loss widened to $61.7 billion from $5.29 billion a year earlier. The results brought AIG’s annual loss to almost $100 billion, prompting the U.S. to offer a package of equity, new credit and lower interest rates on existing loans.

HSBC tumbled 19 percent to HK$46.40 following a one-day suspension. The company yesterday announced plans to raise 12.5 billion pounds ($17.7 billion) to bolster its capital as the bank’s subprime losses cut full-year net income by 70 percent.

Its Hang Seng Bank Ltd. unit, which yesterday posted a 46 percent drop in second-half profit, fell 3.7 percent to HK$81.10. The lender had share-price targets cut at UBS AG, Credit Suisse Group AG and JPMorgan Chase & Co. Credit Suisse downgraded the stock to “neutral” from “outperform.”

Standard Chartered Plc, the London-based lender that gets almost two-thirds of its revenue in Asia, dropped 3.5 percent to HK$69 before an announcement on its 2008 earnings today. Tokio Marine Holdings Inc., Japan’s No. 1 casualty insurer, lost 2.8 percent to 2,070 yen.

Oil, Metals

BHP Billiton fell 2.4 percent to A$27.29. Inpex Corp., Japan’s biggest oil explorer, sank 5.8 percent to 589,000 yen. Mitsui & Co., a trading company that earns more than half its profit from commodities, slid 6.6 percent to 827 yen.

Crude oil for April delivery tumbled 10 percent in New York yesterday, the most since Jan. 7, to $40.15 a barrel. A measure of six primary metals traded in London fell 2.2 percent, with nickel losing 4.5 percent.

Governments from the U.S. to China and Australia have sought to introduce policies this year to help bolster growth in global economy, which the International Monetary Fund expects to grind to a halt this year.

China Life gained 1.5 percent to HK$21. China Overseas Land & Investment Ltd., a real-estate developer controlled by China’s construction ministry, surged 4.4 percent to HK$10.28.

Government Action?

The Chinese government may try to boost confidence by doubling a 4 trillion yuan ($585 billion) stimulus package at a meeting of the National People’s Congress that starts March 5, Stephen Green, Shanghai-based head of China research at Standard Chartered Bank Plc said today.

China is trying to reverse a slump in the world’s third- biggest economy that has cost 20 million jobs as exports collapsed. The nation will “massively” increase government investment in 2009 and expand social security coverage, the Communist Party’s Politburo said Feb. 23.

Sony Corp., the world’s No. 2 consumer-electronics maker, climbed 4.5 percent to 1,734 yen in Tokyo, rebounding from a drop of 3.4 percent. Shares in Japan pared losses after Finance Minister Kaoru Yosano said the government can’t ignore “excessive declines” in the nation’s stock market. Yosano said on Feb. 26 that he ordered a study into ways to bolster equities.

“There are growing expectations the government will take measures to bolster Japan’s stock market toward the end of this month,” said Mitsushige Akino, who oversees about $615 million at Tokyo-based Ichiyoshi Investment Management Co.

Yahoo Japan plunged 9 percent to 25,060 yen, the biggest decline on the MSCI Asia Pacific Index. Naoshi Nema, an analyst at Morgan Stanley, lowered his recommendation on the Tokyo-based company to “underweight” from “equalweight,” citing a possible decline in Internet advertising.

Pacific Basin dropped 8.7 percent to HK$3.16. Profit dropped 13 percent last year amid provisions for ship charters, the shipping line said after the Hong Kong market closed yesterday.

To contact the reporter on this story: Jonathan Burgos in Singapore at jburgos4@bloomberg.net.

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Goldman Sachs, JPMorgan Boost Rights Offer Fees as Risks Grow

By Elisa Martinuzzi

March 3 (Bloomberg) -- Goldman Sachs Group Inc. and JPMorgan Chase & Co. are charging companies 50 percent more than what they were a year ago to guarantee rights offers to compensate for the risk they may be forced to buy unwanted stock.

HSBC Holdings Plc will pay Goldman Sachs, JPMorgan and eight other firms 2.75 percent in fees from the 12.85 billion pounds ($18.3 billion) the London-based bank plans to raise. Royal Bank of Scotland Group Plc paid underwriters led by Goldman Sachs, Merrill Lynch & Co. and UBS AG 1.75 percent for its 12.3 billion-pound sale in June. On average, fees have jumped to 2.9 percent from 1.9 percent in 2008, filings show.

The risk for underwriters in rights offers is investors balk, leaving the banks to buy what’s left over. That could more than wipe out any fees on a transaction. Morgan Stanley and Dresdner Kleinwort Ltd. were among firms left with as much as 92 percent of Edinburgh-based lender HBOS Plc’s 4.2 billion-pound sale in July after the shares fell below the offer price.

“In tumultuous times such as these underwriting becomes riskier and sales more complicated,” said Giorgio Questa, a finance professor at London’s Cass Business School and former investment banker at Italy’s IMI SpA. “The last thing banks would want is to remain on the line for weeks,” he said.

Xstrata Plc, the largest exporter of coal used by power stations, and Snam Rete Gas SpA, Italy’s gas grid operator, are among companies that have announced plans to sell stock over coming months. Enel SpA, Italy’s biggest utility, has also said it’s considering a stock offering, without giving details.

Officials at JPMorgan and Goldman Sachs in London declined to comment.

Eight Weeks’ Wait

European corporate law and securities rules typically require companies to offer existing shareholders first refusal over new stock. In a rights offer, a company gives existing investors the option to buy new stock, often at a discount. Shareholders can choose to buy the shares or sell the rights.

The process takes time, as long as eight weeks on some sales. Companies often need to convene shareholder meetings to vote on the plan and then give buyers a few weeks to decide whether to purchase shares. HSBC, Europe’s biggest bank, will ask investors to vote on the plan March 19 before it completes taking orders for the stock on April 3, almost five weeks after yesterday’s announcement. RBS, the Edinburgh-based owner of the U.K.’s NatWest bank, took seven weeks to complete its offering.

The underwriters face an unprecedented risk that the market may turn against them. Stock market volatility, measured by the VIX, or Chicago Board Options Exchange Volatility Index, is at 49, about 50 percent higher than last year’s average.

‘Not Out of Line’

Deutsche Bank AG and JPMorgan are underwriting part of Xstrata’s 4.1 billion-pound rights offer. The banks are charging about 3.3 percent for their share of the underwriting, the offer document shows.

“The fees are not out of line with our previous rights offers,” Claire Divver a London-based spokeswoman for Xstrata said in an interview. Xstrata paid about 2.75 percent in offerings in 2003 and 2006, said Divver. The fee is bigger this time because the company has had to hold a shareholder vote, drawing out the offer period, she said.

Securities firms are using the higher fees to lure other financial institutions to help them spread the underwriting risk. Banks are passing on fees of as much as 2 percent to so-called sub-underwriters, often investors in companies that guarantee part of the sale for the bank. That fee has more than doubled from the 1 percent sub-underwriters historically received.

Cookson Group Plc, which is raising 255 million pounds in a rights offer set to be completed tomorrow, has lured its biggest shareholders, Standard Life and Aviva Plc, to sub-underwrite its sale. Merrill Lynch & JPMorgan are managing the offer.

Rights offerings are providing a lone bright spot for equity capital markets bankers amid the slowest year for stock sales since 2003, Bloomberg data show. That year, fees for rights offers peaked at 4.3 percent, the commission Allianz SE paid on a 4.4 billion-euro ($5.5 billion) offering, a sign fees could yet rise further.

To contact the reporter on this story: Elisa Martinuzzi in Milan at emartinuzzi@bloomberg.net

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Bayer, Beiersdorf, K+S, Linde, Munich Re: German Equity Preview

By Nadja Brandt and Stefanie Haxel

March 3 (Bloomberg) -- The following is a list of companies whose shares may have unusual price changes in Germany. Stock symbols are in parentheses, and share prices are from the previous close.

DAX Index futures expiring in March increased 0.6 percent to 3,722 as of 8:16 a.m. in Frankfurt. The DAX dropped 3.5 percent to 3,710.07 yesterday.

Bayer AG (BAY GY): Germany’s largest drugmaker reported fourth-quarter net income of 106 million euros ($134 million) that missed analysts’ estimates after an operating loss at its chemicals unit eclipsed gains at the health-care division. Analysts predicted a 190 million-euro profit. The shares fell 3.6 percent to 36.70 euros.

Beiersdorf AG (BEI GY): The maker of Nivea skin creams is targeting organic growth for its consumer business faster than the market in 2009 and in coming years, according to a statement handed to reporters today. Beiersdorf is scheduled to hold its annual press conference and release a detailed breakdown of annual results released in January. The shares dropped 1.8 percent to 32.40 euros.

Deutsche Boerse AG (DB1 GY): German stock-exchange trades fell 55 percent to 98.5 billion euros in February from 217.9 billion euros a year earlier, the operator of the Frankfurt stock exchange said. The shares decreased 5.4 percent to 34.40 euros.

Deutsche Post AG (DPW GY): Europe’s biggest postal service had its recommendation raised to “overweight” from “neutral” at HSBC Holdings Plc, which cited the withdrawal from “U.S. domestic express and the completion of the Postbank disposal.” The shares lost 2.1 percent to 7.48 euros.

K+S AG (SDF GY): Europe’s largest producer of potash used in fertilizers is considering a $2.4 billion cash bid for Compass Minerals International Inc., the Daily Telegraph reported, citing unidentified people. K+S dropped 4.6 percent to 33.88 euros.

Linde AG (LIN GY): The world’s second-biggest maker of industrial gases plans to post preliminary fourth-quarter results. The company may say profit dropped 28 percent, a Bloomberg survey of analysts showed. The shares declined 2 percent to 49.95 euros.

Metro AG (MEO GY): Morgan Stanley cut its share-price estimate for Germany’s largest retailer 20 percent to 20 euros. The stock sank 4.2 percent to 22.06 euros.

Munich Re (MUV2 GY): The world’s biggest reinsurer scrapped a goal for earnings of 18 euros a share in 2010 and said fourth- quarter net income fell 76 percent to 133 million euros. The shares decreased 5 percent to 92.16 euros.

TAG Immobilien AG (TEG GY): The real-estate firm founded in 1882 to build a railway in Bavaria reported a 2008 net loss and forecast the number of companies in the industry will drop as they struggle to obtain funds. The shares retreated 4.4 percent to 1.29 euros.

To contact the reporter on this story: Nadja Brandt in Los Angeles at nbrandt@bloomberg.net; Stefanie Haxel in Frankfurt at shaxel@bloomberg.net

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BP, Admiral, UBM, Persimmon, Drax: U.K., Irish Equity Preview

By Thomas Biesheuvel

March 3 (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 slipped 204.26 or 5.3 percent, to 3,625.83. The FTSE All-Share Index fell 5 percent, and Ireland’s ISEQ Index dropped 4.5 percent.

Admiral Group Plc (ADM LN): The U.K. car insurer and broker that owns the confused.com Web site is scheduled to report earnings. The shares advanced 20 pence, or 2.3 percent, to 875 pence.

Ashtead Group Plc (AHT LN): The second-biggest equipment- rental company in the U.S. is scheduled to report earnings. The shares rose 1.25 pence, or 3.7 percent, to 35.5 pence.

BP Plc (BP/ LN): Europe’s second-largest oil producer may outline plans tomorrow to close the earnings “gap” with rivals in refining and marketing, analysts said. The shares fell 25.5 pence, or 5.7 percent, to 422.75 pence.

Drax Group Plc (DRX LN): The owner of western Europe’s biggest coal-fired power plant is scheduled to report earnings. The shares slipped 14.5 pence, or 2.8 percent, to 504.5 pence.

Jardine Lloyd Thompson Plc (JLT LN): The U.K.’s biggest publicly traded insurance broker is scheduled to report earnings. The shares fell 11.25 pence, or 2.5 percent, to 444.25 pence.

John Wood Group Plc (WG/ LN) The U.K.’s largest oilfield- services provider is scheduled to report earnings. The shares dropped 8.5 pence, or 4.4 percent, to 185.25 pence.

Meggitt Plc (MGGT LN): The U.K. maker of engine-motoring systems for Airbus SAS and Boeing Co is scheduled to report earnings. The shares slipped 8 pence, or 6.4 percent, to 117.25 pence.

Pace Plc (PIC LN): The U.K. supplier of digital TV technology to British Sky Broadcasting Group Plc is scheduled to report earnings. The shares rose 1 penny, or 1.7 percent, to 60 pence.

Persimmon Plc (PSN LN): The U.K.’s second-biggest homebuilder by market value is scheduled to report earnings. The shares rose 3 pence, or 0.9 percent, to 347.25 pence.

Provident Financial Plc (PFG LN): The U.K. lender to low- income households is scheduled to report earnings. The shares fell 28 pence, or 3.2 percent, to 790 pence.

Rotork Plc (ROR LN): The world’s largest maker of valve- actuators used in oil pipelines is scheduled to report earnings. The shares fell 30.5 pence, or 4.3 percent, to 686 pence.

Standard Chartered Plc (STAN LN): The British lender that makes most of its money in Asia is scheduled to report earnings. The shares dropped 77 pence, or 12 percent, to 587 pence.

United Business Media Plc (UBM LN): The publisher of Information Week and owner of PR Newswire is scheduled to report earnings. The shares fell 16.5 pence, or 4 percent, to 398.5 pence.

Wolseley Plc (WOS LN): The world’s biggest distributor of heating and plumbing gear, may announce a 1 billion-pound ($1.4 billion) rights offering by the end of this week as it seeks to manage 3 billion pounds of debt, the Financial Times reported, without saying where it got the information. The shares fell 10.2 pence, or 5.7 percent, to 168.4 pence.

To contact the reporter on this story: Tom Biesheuvel in London tbiesheuvel@bloomberg.net.

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Europe Stock Futures Are Little Changed; Most Asian Shares Fall

By Adam Haigh

March 3 (Bloomberg) -- European stock-index futures were little changed after the Dow Jones Stoxx 600 Index closed at a six-year low. U.S. futures gained, while most stocks in Asia fell as concern the recession is deepening offset speculation Japan will introduce more stimulus measures.

UBS AG may advance after Citigroup Inc. recommended shares of Switzerland’s biggest bank. Kuehne & Nagel International AG, the world’s largest sea-freight forwarder, may be active after reporting a 7.3 percent increase in fourth-quarter profit.

Futures on the Dow Jones Euro Stoxx 50 Index, a benchmark for the euro region, were unchanged at 1,880 at 7:19 a.m. in London. The U.K.’s FTSE 100 Index is set to open 16 points higher, according to inter-dealer broker BGC Partners.

Europe’s Stoxx 600 and the U.K.’s FTSE 100 both closed at the lowest levels since 2003 yesterday as HSBC Holdings Plc and American International Group Inc. spurred concern that financial firms will need more capital.

“After yesterday’s massive sell-off the day does look likely to begin with a modest rebound,” said Matt Buckland, a trader at spread-betting firm CMC Markets in London. “Whether this will prove to be sustainable remains to be seen.”

Futures on the Standard & Poor’s 500 Index added 1 percent after the benchmark index for U.S. equities closed at the lowest level since October 1996 yesterday.

‘Excessive Declines’

The MSCI Asia Pacific Index slipped 0.2 percent today, trimming an earlier drop of as much as 1.7 percent as Japan’s Finance Minister Kaoru Yosano said the government can’t ignore “excessive declines” in the nation’s stock market. Yosano said on Feb. 26 that he ordered a study into ways to bolster equities.

The deepening recession, a third government rescue for Citigroup and dividend cuts at companies from General Electric Co. to JPMorgan Chase & Co. have sent the MSCI World Index of 23 developed countries to a 22 percent drop this year, the worst start since the gauge was created in 1970.

UBS may rise after Citigroup boosted its recommendation on the shares to “buy” from “hold.” The New York-based bank cited the appointment of Oswald Gruebel as chief executive officer as “an important positive for UBS AG shares.”

Kuehne & Nagel may be active after saying fourth-quarter profit rose 7.3 percent to 133 million Swiss francs ($114 million).

Bayer AG may be active. Germany’s largest drugmaker reported fourth-quarter net income of 106 million euros ($134 million), missing the 190 million-euro estimate of seven analysts surveyed by Bloomberg.

Munich Re, the world’s biggest reinsurer, scrapped a goal for earnings of 18 euros a share in 2010 and said fourth-quarter profit fell 76 percent.

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

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