Yen Trades Near 2009 Low Versus Euro as BOJ Raises Debt Buying

By Theresa Barraclough and Ron Harui

March 18 (Bloomberg) -- The yen traded near the weakest level against the euro this year after the Bank of Japan said it will step up purchases of government debt, encouraging investors to seek higher-yielding assets overseas.

The dollar was near a one-month low against the euro as Asian stocks extended a rally in global equities, damping demand for the U.S. currency as a refuge from the financial turmoil. South Korea’s won weakened versus the dollar, snapping a three- day advance, on speculation domestic companies took advantage of its recent gains to pay import bills.

“Governments and central banks are taking various measures which are supporting sentiment that the worst of the financial crisis may be over,” said Yuji Saito, Tokyo-based head of the foreign-exchange group at Societe Generale SA, France’s third- largest bank. “People who had shunned risk are returning to the markets. This is causing selling of the dollar and the yen.”

Japan’s currency traded at 128.48 against the euro as of 3 p.m. in Tokyo, from 128.35 yesterday in New York, when it slid 0.8 percent. It earlier dropped to 128.83, the weakest since Dec. 29. The yen was at 98.51 per dollar from 98.60.

The dollar was at $1.3039 per euro from $1.3017 yesterday, when it declined 0.4 percent. The U.S. currency touched $1.3072 on March 16, the lowest level since Feb. 10. The won fell 0.6 percent to 1,417.65 per dollar, according to Seoul Money Brokerage Services Ltd. It earlier reached 1,389.90 the highest since Feb. 12.

Risk Appetite

The MSCI Asia Pacific Index of regional stocks climbed 0.9 percent after the Standard & Poor’s 500 Index rose 3.2 percent yesterday. The S&P 500 surged 11 percent last week in its biggest rally since November.

“Basically, we’ve seen a bear market rally in risk appetite and in riskier assets such as equities,” Callum Henderson, Singapore-based head of foreign-exchange at Standard Chartered Bank said in a Bloomberg Television interview. “That has taken the upside pressure off the dollar.”

The Bank of Japan said after its policy meeting ended today that it will increase the amount of government debt it will buy to 1.8 trillion yen ($18.3 billion) from 1.4 trillion yen. The BOJ has purchased the bonds since 1989 and last increased the amount in December.

“The direction is clearly up for” the euro, said Masafumi Yamamoto, head of foreign-exchange strategy for Japan at Royal Bank of Scotland Group Plc in Tokyo and a former Bank of Japan currency trader. It may be that a “recovery in risk appetite, given expectations of quantitative easing from central banks, is supporting equity markets.”

The yen is heading for an 8.7 percent loss versus the dollar in the three months to March 31, the end of the nation’s fiscal year, as demand waned for the currency as a shelter from the financial crisis.

Under Pressure

“Going into the Japanese fiscal year-end, we expect the yen to remain under pressure,” analysts led by Hans-Guenter Redeker, London-based global head of foreign-exchange strategy at BNP Paribas SA, wrote in a note yesterday. “It is worth noting that we are now entering the most positive period of the year for the dollar-yen as far as seasonal factors are concerned.”

The Dollar Index declined for a seventh day, the longest losing streak in a year, on speculation the Federal Reserve will say at the end of a two-day policy meeting today that it is shifting toward more aggressive monetary expansion. The index, which the ICE uses to track the U.S. currency’s performance against the euro, yen, British pound, Canadian dollar, Swiss franc and Swedish krona, declined to 86.726 from 86.933.

Fed Chairman Ben S. Bernanke and his colleagues may signal today they will accelerate so-called quantitative easing measures, such as increasing the pace and size of purchases of mortgage securities. The board will keep its benchmark interest rate in a range of zero to 0.25 percent, according to a Bloomberg News survey.

‘Aggressive Efforts’

The yen strengthened against the dollar for the first time in five days after U.S. Treasury Secretary Timothy Geithner signaled that the “wind down” of American International Group Inc. may accelerate.

“We will continue our aggressive efforts to resolve the future status of AIG in a manner that will reduce systemic risks to our financial system,” Geithner wrote in a letter yesterday to House Speaker Nancy Pelosi, Senate Majority Leader Harry Reid and other lawmakers. “We will explore any and all ways to accelerate this wind-down process.”

Geithner has been criticized by Congress for presiding over AIG’s payment of about $165 million in bonuses and retention pay. The company received a government bailout package in September that has since grown to about $170 billion.

‘Remain Intact’

“The market has been paying attention to the recovery in the U.S., but now with AIG, uncertainty has increased,” said Susumu Kato, chief economist in Tokyo at Calyon Securities, the investment banking unit of Credit Agricole SA. “There are risks associated with the U.S. financial industry, so the risk aversion type of strategy will remain intact,” supporting the yen, he said.

The South Korean won dropped from a one-month high against the dollar as the benchmark Kospi index of local shares tempered a rally after climbing 3.4 percent yesterday, the biggest gain in almost seven weeks. The won has strengthened about 8.2 percent since the end of February as signs of an improvement in the U.S. financial industry drove a rebound in global shares.

“The won’s recent strength is spurring a bout of importers’ settlements,” said Lee Young Chul, a currency dealer with Korea Exchange Bank in Seoul. “With local stocks showing signs of faltering, demand for the currency also weakened.”

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

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Rubber Reaches Two-Week High on Supply Cut, Chinese Purchases

By Aya Takada

March 18 (Bloomberg) -- Natural rubber futures climbed to the highest in more than two weeks after producers restated proposed supply cuts and on speculation China, the world’s largest consumer, is adding the commodity to state stockpiles.

Prices in Tokyo rose as much as 3.1 percent to the highest since Feb. 27. Thailand, Indonesia and Malaysia, the world’s three biggest exporters, may cut output by 10 percent this year, a Thai official said today. China’s State Reserve Bureau may buy as much as 80,000 tons in the domestic market, the head of the nation’s industry association said yesterday.

“The 10 percent reduction in supply will be large enough to support prices,” Takaki Shigemoto, an analyst at Tokyo- based commodity broker Okachi & Co., said today by phone. “Chinese buying is another support as the volume of planned purchases is larger than expected.”

Rubber for August delivery, the most-active contract, rose 1.4 percent to 140.9 yen a kilogram ($1,432 a metric ton) on the Tokyo Commodity Exchange at the 11 a.m. local time break.

Thailand, Indonesia and Malaysia agreed in December to reduce combined exports by about 700,000 tons this year.

Farmers in the three nations will cut down rubber trees and reduce output by 900,000 tons to take the global total to 8.12 to 8.15 million tons, Somchai Charnnarongkul, director- general of the Department of Agriculture of Thailand farm ministry, said today. Global output of natural rubber was around 9 million tons last year, he said.

Recent purchases by China’s State Reserve Bureau may reach 50,000 to 80,000 tons, Fan Rende, chairman of the China Rubber Industry Association, said in an interview in Guangzhou yesterday. That would be equivalent to 14 percent of the nation’s output last year.

“I heard previously that China had a plan to buy a total of 30,000 tons natural rubber for stockpiles in the three months to June 30,” Okachi’s Shigemoto said. “If China buys as much as 80,000 tons, that could be positive for prices.”

July-delivery rubber on the Shanghai Futures Exchange, the most-active contract, added 0.6 percent to 12,475 yuan ($1,825) a ton at 11:30 a.m. local time.

To contact the reporters on this story: Aya Takada in Tokyo atakada2@bloomberg.net;

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Hyundai Steel Cuts Hot-Rolled Price on Weak Demand

By Sungwoo Park

March 18 (Bloomberg) -- Hyundai Steel Co., South Korea’s second-largest steelmaker, cut the price of hot-rolled coil by 14 percent on weak demand, the first reduction the company has made this year on its products.

The price was reduced to 880,000 won ($618) per metric ton from 1.02 million won, Chang Young Sik, a spokesman at the Incheon-based company, said today by the phone. The cut took effect earlier in the month, he said, without giving details.

Steel prices in China, the world’s largest consumer, have fallen nearly 10 percent this year on oversupply, spurring calls by Beijing’s Shougang Corp. for mills to cut output by 20 percent. Hyundai Steel in January said sales and output will drop because of the global recession.

Hyundai Steel sells hot-rolled coil to oil pipeline makers, builders and automakers including Hyundai Motor Group.

Separately, the company signed a contract with Welspun Gujarat Stahl Rohren Ltd. in India to supply 100,000 tons of steel sheets for oil pipeline manufacturing this year, it said in an e-mailed statement.

Hyundai Steel gained 0.9 percent to 39,250 won at 12:35 p.m. in Seoul trading, compared with a 0.2 percent gain in the benchmark Kospi stock index.

To contact the reporter on this story: Sungwoo Park in Seoul at spark47@bloomberg.net.

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Goldman Deepens Iron Ore Price Forecast to 40% Drop on Slowdown

By Jesse Riseborough

March 18 (Bloomberg) -- Goldman Sachs JBWere Pty deepened its contract iron ore price forecast to a record 40 percent decline because of slumping global steel production.

Prices for benchmark Australian iron ore may drop to $55 a metric ton in the year starting April 1, down from a record $91 this year, Goldman Sachs analysts led by Malcolm Southwood said in a report yesterday. It had forecast a 30 percent decline.

Goldman joins Macquarie Group Ltd. in cutting price forecasts for iron ore this week. The worst recession since World War II has slashed demand for steel, sending stockpiles soaring at ports in China, the biggest maker of the alloy.

“The major contract suppliers of iron ore will eventually be forced to concede bigger than previously expected price cuts,” the report said. “Negotiations could be protracted and acrimonious.”

Goldman cuts its earnings per share forecast for Rio Tinto Group by 21 percent in 2009 and 30 percent in 2010. BHP Billiton Ltd.’s EPS forecasts were also reduced 3 percent this year and 15 percent in 2010, the report said.

A 40 percent decline would be the biggest drop in Australian iron ore prices on record and comes after six consecutive years of gains, Goldman said.

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

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China May Ship 80% Less Steel Products as Orders Drop

By Helen Yuan

March 18 (Bloomberg) -- China may export 80 percent less steel products this year because of the global recession, leading to rising inventories in the world’s largest producer of the material, the China Iron and Steel Association said today.

“The export situation is very severe,” Shan Shanghua, general secretary of the association, said in a statement posted today on its Web site. The group had previously forecast a 50 percent drop in shipments.

The prediction indicates Chinese exports will deteriorate further after shipments had plunged by 52 percent in the first two months of the year. Chinese steelmakers are also hurting from a 14 percent decline in domestic benchmark prices since February, with many suffering losses.

“A short-lived prosperity in the steel market, driven by traders restocking, no longer exists,” Shan said. “Steelmakers should take rational measures” to slow production, he said.

Steel inventories gained 38 percent to 6.7 million metric tons by the end of February in China’s 20 biggest cities from January, Shan said.

“We currently forecast no growth in Chinese crude steel production this year,” Goldman Sachs JBWere Pty analysts led by Melbourne-based Malcolm Southwood said in a report dated yesterday. Goldman now predicts contract prices for iron ore, a steelmaking material, will drop 40 percent, worse than an earlier forecast of a 30 percent cut.

Tax Help

Beijing-based Shougang Corp. last week called for steelmakers to cut output by 20 percent after production had jumped on expectation of demand coming from the government’s 4 trillion yuan ($585 billion) stimulus package. Prices are now below output costs, the steelmaker had said.

China, which could become a net importer of steel products in March, should adjust export taxes and raise rebates to help the shipment of higher-grade products, the association said. It should also step up anti-dumping investigations, Shan said.

Dumping is the practice of selling products overseas at below the price in the domestic market.

Chinese steel prices have fallen back to last year’s November low, also the worst since 1994, Shan said.

China’s 71 biggest mills posted an aggregate loss of more than 1.06 billion yuan in January, he said. They may extend losses in February and March on lower prices, Shan said.

The statement is from a speech Shan made to the nation’s key steel producers on March 9.

To contact the reporter for this story: Helen Yuan in Shanghai at hyuan@bloomberg.net

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FSA Report Promises a ‘Very British Revolution’ in Regulation

By Caroline Binham

March 18 (Bloomberg) -- Financial Services Authority Chairman Adair Turner has promised to start a “revolution” in financial regulation with new rules for banks and hedge funds to address the worst economic crisis in 80 years.

The U.K. regulator said last month that a report to be issued today will discuss liquidity and capital rules, compensation, accounting, and how the FSA and the Bank of England can monitor risks to the financial system.

“This will be a very polite revolution,” said Simon Gleeson, a regulatory lawyer at London-based Clifford Chance LLP. “It’ll be a very British revolution, where not much is going to happen and everyone will be nice to each other.”

The FSA has come under fire for not doing enough to spot warning signs of the global financial crisis, which has led to the nationalization of Northern Rock Plc and Bradford & Bingley Plc, the takeover of a third bank, and the government holding majority stakes in two others.

The FSA report is one of several from regulatory agencies before the Group of 20 Nations’ summit in April in London, when lawmakers from around the world will try to redesign financial regulation. U.K. Prime Minister Gordon Brown asked Turner to lead the U.K.’s position on the global response to the crisis. The report’s themes, apart from the oversight of system-wide risk, are ones all regulators must discuss ahead of the summit.

No Coincidence

“There’s no coincidence at all in the timing,” said Bob Penn, a regulatory lawyer at Allen & Overy LLP. “This is a clear play to demonstrate thought-leadership, and is a plea for international consensus.”

The FSA said as early as June that it would press ahead with reforming liquidity rules even if other countries lag behind, and has published proposals for banks to hold more Treasury bonds. Similarly, it has published a draft code on compensation; and told banks that they should plan to move to conserve capital in the good times to draw on during the bad.

Different regulators moving at different speeds is the main hurdle to Turner’s proposals: financial regulation is dictated by directives from the European Union, and rules on capital are overseen by an international committee in Basel, Switzerland.

“What is needed is a revolution in Europe and a revolution in the United States,” said Jonathan McMahon, a former FSA supervisor now advising companies on regulation at Promontory Financial Group.

Catch Up With U.K.

There is an international consensus that hedge funds need greater supervision. The FSA already regulates hedge-fund managers and Hector Sants, the FSA’s chief executive officer, told the select committee last month that it would be a good idea for the rest of the world “to catch up” with the U.K.

The FSA said last month if hedge funds posed a risk to the economy if they failed, it would introduce capital and liquidity rules. An obstacle is that the funds are often based overseas, beyond the jurisdiction of the FSA, said McMahon.

At a parliamentary committee hearing last month, Turner also said there would be proposals to increase by “several times” the amount of capital banks hold against risks on their proprietary trading books. Proprietary trading is when a financial company trades securities and other financial instruments with its own money rather than for its customers.

Banks have “been able to trade in pretty much whatever market they choose in whatever instrument they like,” said McMahon. “It is certainly putting the brakes on some of the changes that have occurred over the last 20 years.”

Perhaps the biggest change will be in the way the FSA regulates. Turner told lawmakers that political pressure to use a “light touch” stopped the FSA from asking too many questions.

Scary Sants

The opposition Conservatives suggested last week that should they win the next general election, they may hand supervision of capital back to the Bank of England. The FSA was created by Gordon Brown in 1997 as one of his first acts as then-Chancellor of the Exchequer.

Sants said last week that “people should be frightened” of the FSA. He signaled a move away from principles-based regulation, where companies abide by 11 over-arching themes such as treating customers fairly.

He said the FSA will question the business models of financial companies, become involved in appointing senior executives -- and hold them to account when things go wrong.

“That will be heightening the risk for the FSA,” said Arnondo Chakrabarti, a regulatory lawyer at Allen & Overy. “People can say: ‘You were involved in those business decisions’ if things go wrong.”

To contact the reporters on this story: Caroline Binham in London at cbinham@bloomberg.net

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Arcandor, BMW, HeidelbergCement, Lanxess: German Equity Preview

By Nadja Brandt

March 18 (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 rose 0.5 percent to 4.057.20. The measure, derived from trading in DAX Index futures, provides an estimate of Germany’s benchmark index. The DAX fell 1.4 percent to 3,987.77.

Arcandor AG (ARO GY): The parent of travel company Thomas Cook Group Plc plans to hold its annual shareholders meeting. The shares added 5 percent to 1.47 euros.

Bayerische Motoren Werke AG (BMW GY): The biggest luxury- auto maker plans to publish its annual report and hold its annual press conference. The shares increased 1.7 percent to 22.85 euros.

Douglas Holding AG (DOU GY): Germany’s largest makeup and perfume retailer plans to hold its annual shareholders meeting. The company in February said its first-quarter net income fell 7.1 percent to 87.6 million euros ($114 million). The shares advanced 1 percent to 31.20 euros.

HeidelbergCement AG (HEI GY): The cement maker owned by the German billionaire Merckle family plans to slash its 2008 dividend by 91 percent after net profit last year dropped and the financial market crisis ate into reserves. The shares dropped 1.2 percent to 20.75 euros.

Lanxess AG (LXS GY): Germany’s largest publicly traded specialty chemicals maker is scheduled to release fourth-quarter results. The company in January confirmed its 2008 guidance after a “very weak” fourth quarter. The shares declined 5 percent to 13.04 euros.

Phoenix Solar AG (PS4 GY): The maker of sunlight-powered electricity plants is scheduled to report full-year results. The shares climbed 4.4 percent to 31.18 euros.

SGL Carbon SE (SGL GY): The world’s largest maker of carbon and graphite products plans to report fourth-quarter results. The shares decreased 7.6 percent to 18.60 euros.

Wacker Chemie AG (WCH GY): The maker of chemicals and silicon wafers used in microchips plans to post final fourth- quarter results. The company in January said quarterly profit fell 42 percent on slowing demand in the construction and automobile industries and a one-time charge. The shares fell 6.3 percent to 51.93 euros.

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

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French Connection, RBS, Shell: U.K., Irish Equity Preview

By Andrew MacAskill

March 18 (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 fell 6.89 points, or 0.2 percent, to 3,857.10. The FTSE All-Share Index declined 0.3 percent, and Ireland’s ISEQ Index dropped 0.5 percent.

French Connection Group Plc (FCCN LN): The U.K. fashion retailer with stores in London, New York and Tokyo is scheduled to report earnings. The shares gained 2.3 percent to 56.25 pence.

Prostrakan Group Plc (PSK LN): The U.K. maker of the Tostran testosterone gel is due to publish earnings. The stock fell 2.8 percent to 61 pence.

Royal Bank of Scotland Group (RBS LN): Britain’s biggest government-controlled bank’s corporate banking activity has been “buoyant” since the start of the year, Chairman Philip Hampton told the Financial Times in an interview. The shares fell 2.6 percent to 22.2 pence.

Royal Dutch Shell Plc (RDSA LN): Europe’s biggest oil company by market value needs to pay as much as 4.6 billion euros ($6 billion) into its pension funds after the value of the plans’ assets declined, NRC Handelsblad reported without saying where it got the information. The shares fell 1.3 percent to 1619 pence.

SIG Plc (SHI LN): Britain’s biggest supplier of insulation and roofing materials will announce a 320 million pound ($450 million) capital-raising plan today the Financial Times reported, without saying where it got the information. The stock dropped 10 percent to 105 pence.

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

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Arcandor, Campari, Swatch, UniCredit: Europe Equity Preview

By Nadja Brandt

March 18 (Bloomberg) -- The following companies may have unusual price changes in European trading. Stock symbols are in parentheses, and share prices are from the previous close.

The Dow Jones Stoxx 600 fell 0.7 percent to 172.05. The Dow Jones Stoxx 50 Index declined 0.7 percent to 1,771.97. The Euro Stoxx 50 Index, a benchmark for the nations using the euro, decreased 1.1 percent to 2,012.25.

Arcandor AG (ARO GY): The parent of travel company Thomas Cook Group Plc plans to hold its annual shareholders meeting. The shares added 5 percent to 1.47 euros.

Baloise Holding AG (BALN VX): Switzerland’s third-biggest insurer may say its 2008 profit dropped 55 percent to 362 million Swiss francs ($306 million) because of lower investment income, according to analysts surveyed by Bloomberg. The shares rose 3.8 percent to 64.25 francs.

Bayerische Motoren Werke AG (BMW GY): The biggest luxury- auto maker plans to publish its annual report and hold its annual press conference. The shares increased 1.7 percent to 22.85 euros.

Benetton Group SpA (BEN IM): Italy’s largest clothing maker plans to report final 2008 earnings. The stock rose 0.9 percent to 5.26 euros.

Cie. de Saint-Gobain SA (SGO FP): Europe’s biggest supplier of building materials, raised 1.45 billion euros in a rights offer. The company will issue 103.3 million new shares and the transaction will be completed with a private placement of 4.7 million new shares. The stock lost 55 cents, or 2.6 percent, to 20.79 euros.

Davide Campari-Milano SpA (CPR IM): The beverage maker known for its bittersweet red aperitif plans to report 2008 results. The stock lost 4.6 percent to 4.04 euros.

Douglas Holding AG (DOU GY): Germany’s largest makeup and perfume retailer plans to hold its annual shareholders meeting. The company in February said its first-quarter net income fell 7.1 percent to 87.6 million euros ($114 million). The shares advanced 1 percent to 31.20 euros.

HeidelbergCement AG (HEI GY): The cement maker owned by the German billionaire Merckle family plans to slash its 2008 dividend by 91 percent after net profit last year dropped and the financial market crisis ate into reserves. The shares dropped 1.2 percent to 20.75 euros.

Julius Baer Holding AG (BAER VX): Switzerland’s biggest independent wealth manager doesn’t see reasons for “drastic” cost-cutting measures, Chairman Raymond Baer told Finanz und Wirtschaft in an interview. When its Artio Global U.S. fund unit is sold in an initial public offering, Julius Baer would probably use the proceeds to buy back shares or acquire a private bank, he said. The shares rose 2 centimes, or 0.1 percent, to 29.02 francs.

Lanxess AG (LXS GY): Germany’s largest publicly traded specialty chemicals maker is scheduled to release fourth-quarter results. The company in January confirmed its 2008 guidance after a “very weak” fourth quarter. The shares declined 5 percent to 13.04 euros.

SGL Carbon SE (SGL GY): The world’s largest maker of carbon and graphite products plans to report fourth-quarter results. The shares decreased 7.6 percent to 18.60 euros.

Swatch Group AG (UHR VX): The world’s largest watchmaker holds analyst and media conferences. The shares rose 10 centimes, or 0.1 percent, to 135.1 francs.

Telefonica SA (TEF SM): Spain’s largest telephone company sold 1 billion euros ($1.3 billion) of seven-year bonds, according to a banker involved in the sale. The shares gained 8 cents, or 0.5 percent, to 15.16 euros.

UniCredit SpA (UCG IM): Italy’s biggest bank by assets plans to report fourth-quarter and full-year results before the market opens. The bank plans to hold a conference call at 10:30 a.m. local time.

UniCredit may report a 72 percent drop in fourth-quarter profit to 351 million euros, the consensus estimate of 22 analysts posted on the bank’s Web site showed. Earnings for 2008 were probably below the company’s goal of 4 billion euros, according to the survey. The stock climbed 0.3 percent to 96.85 euro cents.

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

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Taiwan Stocks to Extend World’s Third-Best Rally, JPMorgan Says

By Chen Shiyin

March 18 (Bloomberg) -- Taiwan’s Taiex stock index, the world’s third-best performer this year, may gain as much as 18 percent by end-2009 on the prospect of increasing trade with China, JPMorgan Chase & Co. said.

The index may rise to 6,000 by Dec. 31, after fluctuating between 4,200 and 5,000 in the first half as the global recession continues to weigh on earnings, JPMorgan analyst Nick Lai wrote in a report today. Investors should be “overweight” on technology companies, Lai said. The Taiex rose 0.5 percent to 5,064.48 as of 10:02 a.m. local time.

The index has jumped 10 percent this year, lagging behind only China and Venezuela among the 89 global stock gauges tracked by Bloomberg. Taiwan’s market has rebounded as relations warmed with China, its biggest trading partner, after Taiwanese President Ma Ying-jeou took office last year. The mainland claims the island as its territory.

Trade talks between Taiwan and China “will become an important source of growth for the Taiwan economy in the medium to long term,” Lai said. The “results season in April could be poor, which however provides a buying opportunity,” Lai added.

JPMorgan’s top stock picks include MediaTek Inc., Taiwan’s largest chip designer, which has rallied 40 percent this year and Silitech Technology Corp., a handset keyboard maker, which has jumped 50 percent. Taiwan Cement Corp., the island’s largest supplier of the material, has gained 5.6 percent.

Exports, Economy

Taiwan’s exports fell for a sixth straight month in February, the longest losing streak in seven years. The economy contracted 8.36 percent last quarter, pushing the island into its first recession since the dotcom bubble burst in 2001.

Chinese Premier Wen Jiabao said this month the nation wants to accelerate normalization of trade relations with the island and create conditions for ending the state of hostility. Direct daily flights, shipping and postal links between China and Taiwan started in December.

The island has been ruled separately since Chiang Kai- shek’s Nationalist army retreated there in 1949 after being defeated by Mao Zedong’s Communist forces.

To contact the reporter on this story: Chen Shiyin in Singapore at schen37@bloomberg.net

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China Stocks Advance to Four-Week High, Led by China Petroleum

By Zhang Shidong

March 18 (Bloomberg) -- China’s stocks rose to the highest in almost four weeks, led by energy and copper stocks, on expectation that higher commodity prices will help boost profits.

PetroChina, the nation’s biggest oil and gas explorer, and China Petroleum & Chemical Corp., Asia’s biggest oil refiner, both added more than 1 percent. Jiangxi Copper Co., the country’s No. 1 producer of the metal, rose 5.7 percent after prices gained.

The Shanghai Composite Index, which tracks the bigger of China’s stock exchanges, gained 31.66, or 1.4 percent, to 2,249.98 as of 2:07 p.m. local time, set for the highest since Feb. 23. The CSI 300 Index, measuring exchanges in Shanghai and Shenzhen, advanced 1.9 percent.

“Oil prices have been doing pretty well these day and as long as the uptrend continues, that will help to raise the profitability of energy stocks,” said Zhang Ling, a fund manager at ICBC Credit Suisse Asset Management Co. in Beijing, which oversees the equivalent of $7.21 billion.

The Shanghai Composite has advanced 23 percent this year, the biggest among the 89 indexes tracked globally by Bloomberg, on optimism record new lending and the government’s 4 trillion ($585 billion) stimulus plan to build roads and housing will prevent the world’s third-largest economy from slumping.

China’s economy is showing “early signs” of stabilizing, the World Bank says. The lender cut its forecast for the nation’s economic growth this year to 6.5 percent in a quarterly report released in Beijing today. Its estimate was 7.5 percent in November.

Falling Oil Reserves

PetroChina added 1.3 percent to 11.04 yuan. China Petroleum & Chemical, which is also known as Sinopec, rose 1.3 percent to 8.53 yuan. Oil, which fell from a three-month high today, has risen 8.9 percent so far this year. Prices may advance to record levels in the future because of depleting reserves and a lack of major field discoveries, investor Jim Rogers said yesterday.

“Reserves of oil are going down all over the world,” Rogers said in a Bloomberg Television interview. “The price of oil has to go much, much higher. I don’t know if the oil price will go up to record level in three years or five years. I don’t know when, but I know it is.”

Jiangxi Copper climbed 5.7 percent to 19.75 yuan. Tongling Nonferrous Metals Group Co., China’s second-biggest copper producer, advanced 4.8 percent to 11.42 yuan.

Copper for June delivery on the Shanghai Futures Exchange gained as much as 1.5 percent on speculation that China may increase purchases and after better-than-expected U.S. housing data.

North China Pharmaceutical Co. climbed 5.1 percent to 10.08 yuan after China Business News said the government may publish its 850 billion yuan health-care spending plan as early as this week. Shanghai Pharmaceutical Co. gained 3.2 percent to 9.13 yuan, while Tianjin Tianyao Pharmaceutical Co. added 2.9 percent to 8.06 yuan.

The following companies were among the most active in China’s markets. Stock symbols are in brackets after companies’ names.

China International Marine Containers Co. (000039 CH), the world’s largest maker of shipping containers, added 2.2 percent to 7.86 yuan. The company received a 6.5 billion yuan bank facility from China Development Bank Corp.

China Shipping Development Co. (600026 CH), the nation’s biggest oil carrier, rose 3.2 percent to 10.84 yuan. China Shipping said profit last year rose 18 percent to 5.37 billion yuan. The company also expects sales to tumble 44 percent this year as a slowing economy saps demand for raw materials.

To contact the reporter on this story: Zhang Shidong in Shanghai at szhang5@bloomberg.net

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Japan Bank Stocks Advance on BOJ Measures; Nintendo Slumps

By Patrick Rial

March 18 (Bloomberg) -- Japan’s bank stocks rose on optimism central bank measures will avert a deepening of the recession, while game makers slumped on Deutsche Bank AG’s “sell” rating on Nintendo Co.

Resona Holdings Inc., the nation’s No. 4 listed bank, jumped 4.6 percent after the Bank of Japan said it will increase its government debt purchases from banks to spur lending. Nintendo, maker of the Wii game machine, sank 4.8 percent in Osaka as Deutsche Bank said the company’s profit will decline from next fiscal year. Chugai Pharmaceutical Co. plunged 7.2 percent after its arthritis drug was linked to deaths.

The Topix index was little changed at 760.67 as of 1:49 p.m. in Tokyo, with about the same number of shares rising and falling. The Nikkei 225 Stock Average lost 27.34, or 0.3 percent, to 7,921.79, erasing an early 1.3 percent climb.

“The problem is we’re not seeing much new money flowing into the market, so investors are simply funding some stock purchases by selling others,” said Hideo Arimura, who oversees the equivalent of $1.9 billion at Mizuho Asset Management Co. “A safety net has been put in place for the banks, with expectations they will get capital support from the BOJ.”

The Nikkei has rallied 13 percent since falling to a 26- year low on March 10. Financial and electronics companies have led gains despite dire profit outlooks as authorities moved to shore up the banking system and boost economic growth.

The Bank of Japan today said it will buy 1.8 trillion yen ($18.3 billion) of government bonds each month, up from 1.4 trillion yen now. The central bank yesterday outlined plans to provide as much as 1 trillion yen of subordinated loans to banks to revive lending and replenish capital sapped by falling stocks.

“At the moment, the capital adequacy ratio is a constraint, so by providing the subordinated loans to the banks, banks can extend more loans,” Masaaki Kanno, chief economist at JPMorgan Chase & Co. in Tokyo and a former central bank official, said in an interview with Bloomberg Television. “In the future, the BOJ could increase the total amount of the offer.”

Resona gained 4.6 percent to 1,499 yen. Sumitomo Mitsui Financial Group Inc., Japan’s second-largest bank by market value, added 2.8 percent to 3,340 yen. Orix Corp., the nation’s largest non-bank financial company, soared 9.5 percent to 2,930 yen, after rising by its daily limit yesterday.

U.S. stocks advanced yesterday after the Commerce Department said work began on an annualized rate of 583,000 homes in February, while economists had predicted a drop. That was a 22 percent surge from January, the most since 1990.

Nintendo slumped 4.8 percent to 28,490 yen in Osaka trading, making it the biggest drag on the Topix. The shares were rated “sell” in new coverage by Satoru Kikuchi, a Tokyo-based analyst for Deutsche Bank, who predicted slowing sales of the Wii and DS players and game titles.

Capcom Co., publisher of “Resident Evil” game series, fell 2.7 percent to 1,579 yen, while Konami Corp., maker of “Metal Gear Solid” games, sank 2.4 percent to 1,437 yen.

Chugai Pharmaceutical Co., the Japanese unit of Roche Holding AG, tumbled 7.2 percent to 1,477 yen, making it the Nikkei’s third-biggest loser. The company’s Actemra arthritis treatment was linked to 15 deaths and 221 cases of severe side effects in a trial of 4,915 patients, Chugai said on its web site.

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

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Japan Service Demand Rises for 1st Time in 3 Months

By Jason Clenfield

March 17 (Bloomberg) -- Demand for services in Japan unexpectedly rose for the first time in three months in January as consumers showed resilience to an export-led recession.

The tertiary index, a gauge of money spent on phone calls, power and transportation, gained 0.4 percent from December, when it fell 1.6 percent, the Trade Ministry said today in Tokyo. Economists surveyed by Bloomberg predicted a 0.5 percent decline.

Japan’s recession has fallen hardest on the country’s export-oriented manufacturers and has been slow to take its toll on households. There is a risk that consumer spending will weaken further in coming quarters to reflect cuts to jobs, wages and working hours at companies including Nissan Motor Corp. and Pioneer Corp.

“Consumer spending has been relatively resilient, but given the likely deterioration in the labor market from here, we don’t expect that to be sustained,” said Hiroshi Shiraishi, an economist BNP Paribas in Tokyo. “Manufacturers are going to have to cut payrolls in order to stay in business.”

Spending by Japanese households has held relatively steady considering that the economy shrank an annualized 12.1 percent last quarter. Consumer spending fell 0.4 percent last quarter from the previous three months, compared with a record 13.8 percent decline in exports.

The Nikkei 225 Stock Average climbed 0.5 percent at 9:29 a.m. in Tokyo.

Jobs Cuts

Although some of the country’s biggest manufacturers have cut jobs -- 10,000 by Pioneer and 20,000 by Nissan -- the unemployment rate has risen only 0.3 percentage points to 4.1 percent since the recession deepened in October.

Japanese companies listed on the Tokyo Stock Exchange have cut at least 160,000 jobs in the period. By contrast, firms have cut at least 823,000 jobs since November in the U.S., where the unemployment rate jumped 1.5 percentage points to 8.1 percent in the five months following the bankruptcy of Lehman Brother’s Holdings Inc.

Recent data underscore a divide between Japan’s manufacturers, which depend on overseas markets, and the country’s service companies, which cater to domestic consumers.

Orders for machinery by Japanese makers of cars and electronics fell 27.4 percent in January from the previous month, while bookings by service companies rose 13.5 percent. Profit at manufacturers plunged 94.3 percent last quarter, compared with a 35 percent drop at service firms.

To contact the reporter on this story: Jason Clenfield in Tokyo at jclenfield@bloomberg.net

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S. Korea’s February Department-Store, Discount-Store Sales Fall

By Seyoon Kim

March 17 (Bloomberg) -- Sales at South Korea’s major department stores and discount stores fell in February, adding to signs domestic demand is faltering and the economy is headed for a recession.

Sales at the three biggest department-store chains fell 0.3 percent last month from a year earlier, while sales at discount stores slid 20.3 percent, the most since the government started compiling the figures in 2005, the Ministry of Knowledge Economy said in Gwacheon today.

Consumers are reducing spending as the deepening global recession prompts Asian companies to lower production, close factories and cut jobs. The number of employed people in South Korea dropped by 103,000 last month, the most in five years, as retailers and manufacturers fired workers.

To help prop up an economy that the government says may contract for the first time since 1998 this year, South Korea plans to provide cash, loans, school fees and other financial incentives valued at 6 trillion won ($3.9 billion) to help people cope with rising unemployment and falling wages.

The country’s financial regulator said it will create a 40 trillion-won fund to buy distressed corporate bonds and assets from financial companies as the government tries to prevent a recession. Finance Minister Yoon Jeung Hyun plans to unveil an extra stimulus package this month to add to 51 trillion won in tax cuts and infrastructure spending.

Shares in Lotte Shopping Co., South Korea’s largest department-store operator, have lost 37 percent over the past year. Those of Shinsegae Co., which owns department stores and E-Mart, have fallen 21 percent in the same period.

To contact the reporter on this story: Seyoon Kim in Seoul at skim7@bloomberg.net

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Pakistan’s Raza to Raise Funds Overseas Amid Political Turmoil

By Naween A. Mangi

March 17 (Bloomberg) -- Pakistan plans to raise $500 million in the next 12 months through bonds aimed at Middle East investors as a debt sale in other overseas markets would be too expensive, central bank Governor Syed Salim Raza said.

“The credit-default swap rate for Pakistan is still high so to go to cold-nosed commercial markets wouldn’t suit us,” Raza, 63, who worked for Citigroup Inc. for 36 years in the Middle East, Africa and Europe, said in an interview. “But there are a number of countries in the region who understand Pakistan’s politics very well.”

Raza, who took over as governor on Jan. 2, is seeking to revive Pakistan’s faltering economy as political tensions distract the government from tackling slowing growth and worsening security. President Asif Ali Zardari’s hold on power was weakened yesterday when he relented to pressure from opposition leader Nawaz Sharif and reinstated judges fired under military rule in 2007.

“The state of global financial markets will decide whether Pakistan can tap them for a bond issue, but currently it looks very difficult,” said Farid Khan, director at Credit Suisse Pakistan in Karachi. “Indonesia just raised $3 billion at a prohibitive cost of 840 basis points over U.S. Treasuries and Pakistan’s pricing will be worse.”

Pakistan is aiming to raise funds as the global economy’s worst crisis since the Great Depression prompts investors to avoid riskier emerging markets. Indonesia, rated four levels above Pakistan, last month paid double the premium over U.S. treasuries it paid in June.

Reluctant to Buy

Middle East investors may also be reluctant to buy Pakistan debt as their economies slow amid lower crude oil prices, which have fallen more than $100 from a July high of $147.27 a barrel.

The economy of the Gulf Cooperation Council, which includes Saudi Arabia, the United Arab Emirates, Kuwait, Qatar, Oman and Bahrain, is forecast to contract by 2.4 percent in 2009, after expanding 5.2 percent in 2008, according to a Jan. 22 report by the Kuwait-based Global Investment House.

Pakistan’s government debt is the riskiest in the world after Argentina and the Ukraine, according to credit-default swap prices from CMA Datavision. It costs $2.3 million annually to protect $10 million of the country’s debt from default for five years.

Still, the cost to investors of protecting Pakistan debt has more than halved since October after the South Asian nation was forced to seek a $7.6 billion bailout from the International Monetary Fund. The price of Pakistan credit-default swaps has dropped to 2,324 basis points on March 13 from as high as 5,101.7 on Oct. 27.

Political Confrontation

Protests this weekend sharpened a nearly three-week old confrontation that began Feb. 25, when the Supreme Court barred Sharif, Zardari’s chief rival and a former prime minister, from holding public office. U.S. Secretary of State Hillary Clinton has urged Zardari and Sharif to calm the conflict.

“The political turmoil is going to hit the economy from all sides, especially hurting foreign investment and consumer confidence,” Credit Suisse’s Khan said. “The timing of this political storm couldn’t have been worse.”

Tumult in domestic politics since Zardari’s government was elected in February 2008 has hurt the administration’s efforts to raise investment and boost growth. The economy is forecast by the government to expand 2.5 percent this year, compared with 5.8 percent last year.

Additional IMF Loan

Pakistan may not necessarily need to ask the IMF for an additional $4.5 billion, Raza said in the March 13 interview in Karachi. Finance Adviser Shaukat Tarin said last month the nation would seek the additional funding.

“No matter how bitter politics get, as long as they’re not disrupting the flow of commerce, it doesn’t really affect the economy that much,” said Raza, who has a master’s degree in philosophy, politics and economics from Oxford University. “The initial purpose of the IMF program and our success in living within its stipulations would be to reattract investors.”

Foreign investors are deterred by low ratings on Pakistan. Standard & Poor’s rates the nation’s debt CCC+, seven levels below investment grade.

“If foreign investors see more risk in Pakistan, their flows won’t fall off more than now,” said Raza, who lived in London for 25 years. “Domestic investors have seen periods of instability for so long that they look over the valley towards the hills.”

Overseas direct investment in Pakistan rose 1.3 percent to $2.59 billion in the seven months ended Jan. 31, according to central bank data.

‘Quick to Upgrade’

“I don’t think rating agencies will be very quick to upgrade anyone,” said Raza. “But for Pakistan it looks better and better.”

The country’s trade deficit narrowed by 60 percent in February and the budget gap is forecast to decline to 4.3 percent of gross domestic product in the 12 months ending June 30, from 8 percent a year ago, after the government ended subsidies on fuel and electricity.

“A break in fiscal discipline and a revival of inflation worry me the most,” said Raza. The central bank plans to cut interest rates from the highest in more than a decade in the next few months as inflation slows and the nation’s foreign reserves grow, he said.

“Raza’s single biggest challenge is to ensure he doesn’t take an eye off bringing inflation down because there are immense pressures to ease monetary policy,” said Zakir Mahmood, chief executive officer of Habib Bank Ltd., the second biggest in Pakistan by assets. “His challenge is to ensure that doesn’t happen prematurely.”

Borrowing Costs

The bank raised borrowing costs four times last year as inflation accelerated to a three-decade high.

“The risk of too sharp a cut is to convey the feeling that the battle against inflation has been won and unfortunately, that’s not true,” Raza said. “But with things going in the right direction, the stage is set within the next couple of months for an opportunity to lower the rate.”

The central bank predicts inflation mayp«8Öe to 11 percent by June from 21.07 percent last month.

“The biggest challenge for Pakistan is that we cannot afford fiscal stimulation. Foreign investment has slowed down and so stimulation has to come from banking,” said Raza. “Banks are pulling their horns in a bit and we can relax regulation but we can’t take the fear out.”

Bank loans to private companies fell to 133.1 billion rupees ($1.65 billion) in the eight months ended Feb. 28, compared with 289.3 billion rupees a year earlier, according to central bank data.

“The governor’s biggest challenge is to introduce realism in banking, which is missing,” said Hasan Bilgrami, chief executive officer at Bank Islami Ltd., an Islamic bank. “The amending of rules according to the environment happens everywhere in the world but here.”

To contact the reporter on this story: Naween A. Mangi in Karachi, Pakistan on Nmangi1@bloomberg.net.

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Australian, N.Z. Dollars Near 1-Month High Before RBA Minutes

By Candice Zachariahs

March 17 (Bloomberg) -- The Australian and New Zealand dollars traded near the strongest in a month before the Reserve Bank of Australia releases minutes of the meeting where it halted the nation’s most aggressive cycle of interest rate cuts.

The currencies traded close to two-month highs versus the yen as traders yesterday pared bets the RBA will lower its benchmark by 50 basis points, or 0.5 percentage point, when it meets April 7. They also rose as prices of commodities, which account for more than half of the two nations’ exports, advanced for a third session.

“Markets may get a sense that RBA strategy is relatively comfortable going into the pause,” said Tony Morriss, a senior markets strategist at Australia & New Zealand Banking Group Ltd. in Sydney. “In recent days, with better stock market performance, the market seems to be moving away from pricing a full 50 basis point cut at the next meeting.”

Australia’s currency rose 0.1 percent to 65.95 U.S. cents as of 8:29 a.m. in Sydney, near a one-month high of 66.38 cents touched yesterday. The currency advanced 0.1 percent to 64.77 yen from 64.71 yen late in New York yesterday.

New Zealand’s dollar gained 0.1 percent to 53.04 U.S. cents from 52.99 cents late in New York yesterday, when it touched 53.40 cents, the highest since Feb. 10. It bought 52.09 yen from 52.02 yen.

The Australian dollar is likely to find buyers at 65.50 U.S. cents and struggle to get above 66.40 cents, Morriss said.

RBA Governor Glenn Stevens held benchmark rates at 3.25 percent on March 3 after 4 percentage points of reductions since September. Traders were betting yesterday on a 71 percent chance of a cut to 2.75 percent next month, from 91 percent late last week, according to a Credit Suisse Group index based on swaps trading.

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’ higher- yielding assets. The benchmark in New Zealand is 3 percent.

The currencies also rose as crude oil gained to a two- month high in New York, pushing the UBS Bloomberg Constant Maturity Commodity index of 26 raw materials up 1.7 percent.

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

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Euro Trades Near 5-Week High as Stark Says Limit for Rate Cuts

By Theresa Barraclough and Ron Harui

March 17 (Bloomberg) -- The euro traded near a five-week high against the dollar after a newspaper reported European Central Bank Executive Board member Juergen Stark said there was limited room for further interest-rate cuts.

The 16-nation currency may gain for a fourth day versus the yen on speculation the worst of the banking crisis is over as the European Union considered raising a 25 billion euro ($32.4 billion) limit on aid to member nations. The dollar may weaken for fifth day against the pound on speculation the Federal Reserve will announce additional measures to keep down U.S. funding costs at its two-day policy meeting starting today.

“The euro is getting a lot of support from comments by Stark who said there was limited room for further easing,” said Sean Callow, a senior currency strategist in Sydney at Westpac Banking Corp., Australia’s biggest lender by market value. “There’s some nervousness about the FOMC meeting,” which is weighing on the dollar, he said.

Europe’s currency traded at $1.2960 as of 9:20 a.m. in Tokyo, from $1.2968 late yesterday in New York when it rose 0.3 percent. It strengthened 2.2 percent last week, the first weekly advance since early February. The yen traded at 127.51 per euro from 127.32 yesterday when it dropped 0.5 percent. It was at 98.24 per dollar from 98.18.

The yen rose 0.3 percent to 9.9002 against the South African rand. Against the pound, the dollar traded at $1.4063 from $1.4064. The euro was little changed at 92.20 British pence.

The euro climbed past $1.30 yesterday for the first time since Feb. 10 after the Group of 20 finance ministers at a meeting on the weekend told the International Monetary Fund it will have its resources at least doubled to $500 billion.

‘Little More Room’

“We have a little more room” to lower rates, Stark said in a preview of an article to be published in Handelsblatt today. “For me personally, the threshold isn’t far away from the current level,” he said.

Investors maintained bets the ECB will reduce borrowing costs at its next policy meeting on April 2. The yield on the three-month Euribor interest-rate futures due June traded at 1.47 percent, from 1.535 percent a week ago, according to data compiled by Bloomberg.

The dollar was near a one-week low versus the pound after U.S. Treasury Secretary Timothy Geithner and President Barack Obama announced a series of programs yesterday to spur lending to small businesses. As part of the initiative, the Treasury will require the 21 largest banks that get funds from the $700 billion financial rescue to report every month details about their lending to small businesses.

Greater Resources

“The recent G-20 summit endorsed a call for greater IMF resources to help at-risk countries and the U.S. is beginning to move forward with its financial rescue packages,” analysts led by Mansoor Mohi-Uddin, chief currency strategist in Zurich at UBS AG, wrote in a research note yesterday. “The developments are not favorable for the dollar.”

The Fed will keep rates in a range of zero to 0.25 percent when the meeting ends tomorrow, according to a Bloomberg survey. After the Federal Open Market Committee’s previous meeting ended on Jan. 28, policy makers said they were “prepared to purchase longer-term Treasury securities” if it became clear the policy would be “particularly effective” in getting credit flowing.

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

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China Life, Ayala Land, Tianjin: Asia Ex-Japan Equity Preview

By Anuchit Nguyen

March 17 (Bloomberg) -- The following companies may have unusual price changes in Asian trading, excluding Japan. Stock symbols are in parentheses, and share prices are from the previous close, unless noted otherwise.

China Life Insurance Co. (2628 HK): The nation’s biggest insurer said it had 67.2 billion yuan ($9.8 billion) in premium income for the first two months of this year. That was a 12.6 percent increase from the 59.7 billion yuan reported a year earlier, according to Bloomberg News calculations. The stock jumped 6.5 percent to HK$25.25.

Philippine builders: Funds sent home by Filipinos working overseas increased 0.1 percent to $1.27 billion in January, the central bank said yesterday. That’s the slowest pace since January 2004, according to Bloomberg data. Filipinos based overseas account for half of Philippine home purchase demand, Colliers International Inc. estimated in October. Ayala Land Inc. (ALI PM), the nation’s biggest developer, was unchanged at 5.20 pesos. Vista Land & Lifescapes Inc. (VLL PM), which relies on overseas Filipinos for 60 percent of its home sales, fell 2.7 percent to 73 centavos.

Pure Energy Resources Ltd. (PES AU): The Australian coal- seam gas explorer recommended shareholders accept a takeover offer from BG Group Plc after Arrow Energy Ltd. let its bid expire. Pure Energy slipped 0.2 percent to A$18.15.

Philippine Long Distance Telephone Co. (TEL PM): Moody’s Investors Service, which last week put the carrier’s local currency debt rating on review for possible upgrade, yesterday (MONDAY) said it changed the status of the review to “direction uncertain,” citing the company’s plan to buy 20 percent of Manila Electric Co., a “non-core business.” Shares dropped 12 percent to 1,895 pesos.

Samsung Heavy Industries Co. (010140 KS): The world’s second-largest shipyard plans to sell 700 billion won ($486 million) of bonds next week in its first local currency sale in seven years to expand docks. The three-year bonds will pay a 6.22 percent coupon in the domestic market, the Seoul-based company said in a regulatory filing. The stock dropped 2.9 percent to 23,600 won.

San Miguel Brewery Inc. (SMB PM): The nation’s biggest brewer borrowed 38.8 billion pesos ($800 million) in a record bond sale by a non-government Philippine borrower, two people with knowledge of the matter said. The company will pay about 250 basis points above comparable 3-, 5- and 10-year Treasuries. Shares fell 1.2 percent to 8.60 pesos.

Tianjin Port Development Holdings Ltd. (3382 HK): The Chinese container port operator agreed to buy a controlling stake in Shanghai-listed affiliate Tianjin Port Holdings Co. for HK$11 billion ($1.4 billion). Tianjin Port Development, whose shares will resume trade in Hong Kong after being suspended yesterday, jumped 11 percent to HK$2.25 on March 13.

Towngas China Co. (1083 HK): The mainland unit of Hong Kong’s largest gas supplier, posted a 40 percent increase in 2008 profit to HK$202 million ($26 million), or HK$10.32 a share, because of increased sales in mainland China. The stock rose 1.4 percent to HK$1.49.

Westpac Banking Corp. (WBC AU): Australia’s biggest lender by market value increased a government-guaranteed bond sale to A$3.27 billion ($2.1 billion). The Sydney-based lender sold A$210 million more of the floating-rate notes maturing in March 2012 at 60 basis points above the Australian bank-bill swap rate, arrangers Westpac and HSBC Holdings Plc said in an e-mailed statement. The stock rose 1.1 percent to A$17.13.

To contact the reporter on this story: Anuchit Nguyen in Bangkok at anguyen@bloomberg.net.

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Japanese Stocks Climb on Bank Optimism, Hitachi Restructuring

By Patrick Rial

March 17 (Bloomberg) -- Japanese stocks climbed for a third day on optimism bank earnings may rebound and as Hitachi Ltd. announced new restructuring plans.

Mizuho Financial Group Inc., Japan’s No. 2 list bank, added 3.2 percent on speculation the Bank of Japan may act to shore up bank capital at its policy meeting starting today and after London-based Barclays Plc said it had a “strong start” to 2009. Hitachi rose 0.4 percent. Sumco Corp., the world’s second- largest maker of silicon wafers, was bid higher by 1.5 percent after two brokerages lifted ratings on the shares.

The Nikkei 225 Stock Average added 62.53, or 0.8 percent, to 7,766.68 as of 9:03 a.m. in Tokyo, a third-consecutive gain for the gauge, which is still down 12 percent in 2009. The broader Topix index climbed 5.34, or 0.7 percent, to 747.03.

“While this bear market rally looks like it’s got further to go, stocks are starting to get a bit top heavy,” Mamoru Shimode, chief equity strategist at Resona Trust & Banking Co. said in an interview with Bloomberg Television. “Investors are looking to do some rotational buying today.”

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

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Australia Stocks, Japan Futures Rise on Bank Optimism, Hitachi

By Patrick Rial

March 17 (Bloomberg) -- Australian shares and Japanese stock futures climbed on optimism bank earnings may rebound and as Hitachi Ltd. announced new restructuring plans.

Commonwealth Bank of Australia, the nation’s largest lender, rose 1.2 percent in Sydney after London-based Barclays Plc said it had a “strong start” to 2009. U.S.-traded receipts of Sumitomo Mitsui Financial Group Inc., the Japan’s No. 2 lender by value, added 0.5 from the close in Tokyo on speculation the Bank of Japan may act to shore up bank capital at its policy meeting starting today. Hitachi rose 1.1 percent.

Australia’s S&P/ASX 200 Index gained 0.6 percent to 3,36.10 as of 10:07 a.m. in Sydney. New Zealand’s NZX 50 Index lost 0.5 percent in Wellington.

“While this bear market rally looks like it’s got further to go, stocks are starting to get a bit top heavy,” Mamoru Shimode, chief equity strategist at Resona Trust & Banking Co. said in an interview with Bloomberg Television. “Investors are looking to do some rotational buying today.”

Futures on Japan’s Nikkei 225 Stock Average expiring in June finished at 7,810 in Chicago, up from 7,680 in Osaka and 7,690 in Singapore. In New York, the Standard & Poor’s 500 Index reversed a 2.4 percent advance in the final hours of trading to slump 0.4 percent to 753.89.

The MSCI Asia Pacific Index has declined 15 percent this year, adding to a record 43 percent slide in 2008. Earnings forecast cuts have left the benchmark trading at 23 times estimated profits, up from 17 times at the beginning of 2008.

New President

Barclays, the U.K.’s third-biggest bank, said yesterday it had a “strong start” to 2009, echoing comments from banks such as Citigroup Inc. and JPMorgan Chase & Co. The company is in talks to sell its iShares exchange-traded funds unit.

The Bank of Japan starts a two-day policy meeting today. The Nikkei newspaper said yesterday the central bank is considering buying subordinated loans and subordinated bonds from lenders as a step to help bolster their capital and offset losses caused by writedowns on stock investments.

Hitachi said yesterday Takashi Kawamura, 69, will take over as president and chief executive officer starting April 1. The company also plans to spin off its automotive systems and consumer units, a move that may make sales or tie-ups easier, and reduce costs by 500 billion yen ($5.1 billion) in the 12 months ending March 31, 2010.

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

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