Europe Stocks Fluctuate as Air France Drops; U.S. Futures Fall

By Adria Cimino

March 27 (Bloomberg) -- European stocks fluctuated between gains and losses as the Dow Jones Stoxx 600 Index headed for its third straight weekly advance. U.S. index futures slipped.

Air France-KLM Group dropped for a third consecutive day as Europe’s biggest airline said the global recession and collapse in air travel will push it to a loss for the year. Siemens AG, the region’s largest engineering company, rose 3.7 percent after sticking to its profit forecast for this year.

Europe’s Stoxx 600 slipped less than 0.1 percent at 8:25 a.m. in London after increasing 0.1 percent, leaving it with a weekly advance of 3.8 percent. The MSCI Asia Pacific Index rose 0.1 percent, extending its climb since March 20 to 7.6 percent.

Futures on the Standard & Poor’s 500 Index fell 0.3 percent. The benchmark for U.S. equities rallied yesterday, extending the market’s best monthly gain since 1974.

The MSCI World Index of 23 developed countries has gained 12 percent in March, the biggest advance since 1975, as banks from Citigroup Inc. to Bank of America Corp. and JPMorgan Chase & Co. said they made money in the first two months of 2009 and U.S. Treasury Secretary Timothy Geithner unveiled plans to rid financial firms of toxic assets.

Obama, Pandit, Dimon

President Barack Obama will seek support today from executives of the nation’s largest banks for his plan to stabilize the financial system. The meeting at noon Washington time is scheduled to include chief executive officers Vikram Pandit of Citigroup, JPMorgan’s Jamie Dimon and Lloyd Blankfein of Goldman Sachs Group Inc.

Reports on U.S. consumer spending and sentiment may provide evidence about the pace of economic recovery. U.S. consumer spending probably rose in February for a second month, economists said.

Today’s data “could unnerve investors once again should any big shortfalls be seen,” Matthew Buckland, a dealer at CMC Markets in London, wrote.

Air France slumped 5.5 percent to 6.74 euros. The airline said it will post a loss for the year ending March 31 and that it’s unlikely to report a profit in the following 12 months. The airline will suffer an operating loss of about 200 million euros ($271 million) this fiscal year.

Siemens added 3.7 percent to 46 euros. The company stuck to its profit forecast for this year and said earnings at its main divisions will rise at least 10 percent in the three months through March.

BMW Advances

Bayerische Motoren Werke AG climbed 2.4 percent to 23 euros. The world’s biggest maker of luxury cars was raised to “buy” from “hold” at Societe Generale SA, which said “fundamentals remain very solid despite a very tough environment.”

Balfour Beatty Plc gained 3 percent to 345 pence. Britain’s biggest builder was raised to “equal weight” from “underweight” at Morgan Stanley.

Monte dei Paschi di Siena SpA surged for a 10th straight day, rising 6.8 percent to 1.17 euros. Italy’s third-biggest bank said it will apply for 1.9 billion euros in government aid after posting a 47 percent decline in fourth-quarter profit.

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

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Wakeup Call: Geithners Proposed 'New Rules' Of The Banking Game Will Hit Financials In Today's Trading

Daily Forex Fundamentals | Written by Saxo Bank | Mar 27 09 08:31 GMT |

Geithner's proposed changes on new regulation for the banking industry will put banks' profit under pressure. Capital reserve requirement will be higher. Calendar Economic Data Releases Country Name Time (GMT) Expectation Prior Comment UK 09:30 GDP YoY (4Q) -1.9% -1.9% EC 10:00 Industrial New Orders YoY (JAN) -28.4% -22.3% US 14:00 University of M. confidence (MAR) 56.8 56.6 What's going on? The proposed changes by Secretary Geithner yesterday on regulating the financial industry will put banks profits under pressure as they will be forced to hold more reserve capital. Financial institutions that due to their size could posses a systemic risk will face the heaviest demands. Japan is now experiencing deflation. CPI YoY (FEB) was released yesterday at -0.1%. Russian banks are in trouble due to the amount of bad loans surges. Potentially 20% of the loans in Russia are at risk of defaulting within this year. The Russian Government is expected to step in with aid. FX FX Daily stance Comment EURUSD 0 Neutral. Ranging and risk/reward not convincing EURJPY - A retracement likely after sustained gains. Sell around 133 with a stop above 134 and target 131. USDJPY - Sell on rallies with a stop above 98.30. Target 97.50. GBPUSD 0/+ Could be supported by stock strength. Buy on dips with a stop below 1.4350 and target +1.46. EURNOK - Sell on rallies towards 8.80 and target 8.75. Keep a stop above 8.8150. Equities Equities Daily stance Comment DAX 0/+ Buy at the break of 4268 targeting 4330 initially, 4429 finally. S/L at 4200. FTSE 0/+ Buy at the break of 4000 targeting 4125. S/L at 3938. S&P500 0/+ Buy on dips. Target 840. S/L below 814. Nasdaq100 0/+ Nikkei225 0/+ Futures Commodities Daily Stance Comment Gold(XAUUSD) 0/- Sell at the break of 930 targeting 917. S/L at 938. Be careful - Close to trendline support. Silver(XAGUSD) 0/- Sell at the break of 13.47 targeting 13.14. S/L at 13.58. Oil (CLK9) + Buy at the break of 54.75 targeting 57. S/L at 53.75. FX Options FX-Options Comment EURUSD Despite the dump in spot down to 1.3500, implied vols are holding up quite well, Suggesting a likely move higher in spot in the days ahead. AUDUSD AUD Vols are softer today with the currency unable to breach 7100 for the time being. Spot should continue to trade sideways with a bias higher into next week. USDJPY Vols have been sold off in the front end suggesting very congested spot order boards. Overall, look for spot to trade lower into next week then higher into Easter. Analysis Disclosure & Disclaimer Saxo Bank A/S shall not be responsible for any loss arising from any investment based on any recommendation, forecast or other information herein contained. The contents of this publication should not be construed as an express or implied promise, guarantee or implication by Saxo Bank that clients will profit from the strategies herein or that losses in connection therewith can or will be limited. Trades in accordance with the recommendations in an analysis, especially leveraged investments such as foreign exchange trading and investment in derivatives, can be very speculative and may result in losses as well as profits, in particular if the conditions mentioned in the analysis do not occur as anticipated. Saxo Bank utilizes financial information providers and information from such providers may form the basis for an analysis. Saxo Bank accepts no responsibility for the accuracy or completeness of any information herein contained. Any recommendations and other comments in Saxo Bank's analysis derive from objective fundamental macro economical and company specific calculations, statistical and technical analysis, and subjective general market assessment. If an analysis contains recommendations to buy or sell a specific financial instrument, such recommendation should be seen as Saxo Bank's opinion that the specific instrument will respectively outperform the relevant market or underperform compared to the market. Saxo Bank's recommendations should statistically correspond to an even distribution between buy and sell recommendations. The recommendations may expire promptly due to market volatility and in general, Saxo Bank does not anticipate its recommendations to be valid more than one month. An analysis will be updated if and only if a market development or other issues relevant to the analysis render a new analysis on the same topic relevant. Saxo Bank's analysis does not cover any specific financial product over time but only products which Saxo Bank's strategy team finds it important to cover at any given point in time. In order to prevent conflicts of interest, Saxo Bank has established appropriate business procedures, incl. procedures applicable to research and analysis to ensure objective research reports. Saxo Bank's research reports have not been discussed with the parties, e.g. issuers of securities, mentioned in the analysis. Saxo Bank is under supervision by the Danish Financial Supervisory Authority. Saxo Bank does not engage in corporate finance activities and accordingly, Saxo Bank's employees, incl. the persons responsible for an analysis, do not receive remuneration associated with investment banking transactions.

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Morning Forex Overview

Daily Forex Fundamentals | Written by Dukascopy Swiss FX Group | Mar 27 09 08:23 GMT |

Previous session overview The dollar fell against the yen in Asia Friday because Japanese exporters sold the greenback to settle their accounts for the fiscal-year-end book-closing on March 31. On Thursday, most major USD cross rates, including EURUSD, entered calmer waters after some nervous market swings recently. During the morning session in Europe, EURUSD hovered in a sideways trading pattern between USD1.3550 and USD1.36. The pair trended cautiously higher early in US trading. Sterling opened lower at USD1.4578 after a weaker than expected Retail Sales Report showing a -1.9% decrease last month. Prices jumped to a morning Hi of USD1.4640, before following equity prices lower, to a morning low of USD1.4475. Traders brought prices to a daily Lo of USD1.4426, before closing the day-session at USD1.4439. The yen fell on Thursday as sharp gains on Wall Street led by consumer shares along with the surge in oil, gold, and other base metals offset persistent concerns about the viability of the U.S. banking system, dampening the Japanese currency's safe-haven appeal. Steady but consistent growth in global equities markets' so-called bear market rally continued to support the Australian dollar in late Asian trade Friday. The Australian dollar continued to hug the USD0.70 mark tightly Friday, providing some speculation it may be forming a firmer base around that psychologically important figure. Market expectation Dollar is unlikely to continue falling, dealers said, because many short-term-focused investors are refraining from dealing actively ahead of an event-rich next week. Several traders spoke about a disconnection between stocks and currencies - with risk aversion still more prevalent in foreign exchange trade. Others talked about the yen being supported by repatriation of funds before the end of the Japanese fiscal year. Still, the euro remained inside its recent tight range against the dollar. EURUSD currently holding inside Thursday's NY range, with traders suggesting the pair remains stymied ahead of next week's ECB rate announcement and G-20 summit. Decent bids said to come in under USD1.3500, with stops then noted in the USD1.3470 area, ahead of this week's lows in the USD1.3420 zone. Offers come in on approach to USD1.3600, more at USD1.3640/50 and USD1.3670. Technical analysts saying dollar-yen has pushed over Fibonacci and resistance line at JPY98.24/30, supported by a bull-cross in the stochastic study, 10-day momentum and now 5&21-DMAs. Main support is back at JPY93.40/57 with JPY96.10/25 and JPY94.51 ahead of there, while the MAs lend initial support at JPY97.70/00. Dukascopy Swiss FX Group Legal disclaimer and risk disclosure This overview can be used only for informational purposes. Dukascopy SA is not responsible for any losses arising from any investment based on any recommendation, forecast or other information herein contained.

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Forex Technical Analytics

Daily Forex Technicals | Written by FOREX Ltd | Mar 27 09 08:16 GMT |

CHF The assumed test of key resistance range was confirmed with conditions for the realization of the pre-planned long positions. OsMA trend indicator having marked preservation of low activity and current bearish cycle of indicator chart gives reasons for preservation of open short positions for today as well. Hence the targets for short positions will be 1.1180/1.1200, 1.1120/40 and/or further breakout variant below 1.1080 with targets up to 1.1020/40, 1.0940/60, 1.0820/40. The alternative for buyers will be above 1.1360 with targets 1.1400/20, 1.1460/80, 1.1520/40. GBP The pre-planned breakout variant for sells was realized with attainment of minimal assumed target. OsMA trend indicator, having marked preservation of minimal bearish activity advantage nevertheless is not a confirming sign for priority of bearish direction in trading operations planning for today. Hence considering the current situation as indefinite and targeting at trading risks decrease we assume the possibility of rate return to upper boundary of Ichimoku cloud at 1.4580/1.4620, where it is recommended to evaluate activity development of both parties according to the charts of shorter time interval. For short-term sells on condition of formation of topping signals the targets will be 1.4480/1.4520, 1.4360/1.4400, 1.4280/1.4300 and/or further breakout variant up to 1.4210/30, 1.4140/60, 1.4020/60. An alternative for buyers will be above 1.4660 with targets 1.4700/20, 1.4760/80, 1.4820,40, 1.4960/1.5000. JPY The pre-planned breakout variant for buying positions was realized but with failure in attainment of minimal assumed targets. OsMA trend indicator, having marked the high of the current week by the sign of pair overbought and by further relative bearish activity rise is not a definite sign for confident choice of sells planning priorities for today. Hence supporting version of possible range rate movement we assume attainment of channel line '1' at 97.00/20, where it is recommended to evaluate activity development of both parties according to the charts of shorter time interval. For short-term buying positions on condition of formation of topping signals the targets will be 97.60/80, 98.40/60, 99.00/20 and/or further breakout variant up to 99.60/80, 100.20/40. An alternative for sells will be below 96.00 with targets 95.20/40, 94.60/80, 93.80/94.20. EUR The pre-planned buying positions from key supports were realized with attainment of minimal assumed target. OsMA trend indicator, having marked preservation of low activity of both parties as before continues supporting version of range rate movement for the choice of planning priorities for today. Hence we assume the possibility of rate return to 1.3480/1.3500 supports, where it is recommended to evaluate activity development of both parties according to the charts of shorter time interval. For short-term buying positions on condition of formation of topping signals the targets will be 1.3540/60, 1.3620/40, 1.3700/40 and/or further breakout variant up to 1.3780/1.3800, 1.3840,90, 1.3900/20. An alternative for sells will be below 1.3400 with targets 1.3340/60, 1.3280/1.3300, and 1.3160/1.3200. FOREX Ltd www.forexltd.co.uk

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Technical Analysis for Crosses

Daily Forex Technicals | Written by ecPulse.com | Mar 27 09 07:11 GMT |

GBP/JPY Sterling versus Japanese yen is still moving according to our bearish harmonic scenario while Bands supported this negative overview as we mentioned in our yesterday's mid-day report but actually the weakness appearing on the Japanese currency itself is slowing down this highly expected bearish action but still there are new signs appearing on the price by forming bearish candlestick pattern inside the proposed descending channel and moving below DEMA. Hence we think that the pair will reach the 2nd target of the mentioned pattern around 139.25 zones if it succeeded to breach 141.50 clearly in its second technical attempt. Trading range for today is among key support at 138.15 and key resistance at 148.70. The general trend is to the downside as far as 148.70 remains intact with target at 116.00 Support: 141.70, 141.00, 140.00, 139.25, 138.15 Resistance: 143.00, 143.85, 144.60, 145.00, 145.65 Recommendation: According to our analysis, we believe that it is good to sell the pair at 142.25 with targets at 139.75 and stop loss at 144.00. EUR/JPY Euro versus Japanese yen is moving in a sideways channel as we see on the hourly chart appearing on the left side of the 4 h chart which indicates the impulsive 5 waves sequence since (Feb 2nd-2009) which placed a high around 134.50 areas. This whole wave is the third one inside the whole rise started at 111.96(21st Jan. 2009) claiming that an A-B-C (reactionary wave) is under construction for the time being targeting the lower line of the whole channel forming the default 4th wave. All what is needed now to confirm this bearish overview is a break out below 132.50 areas. Trading range for today is among key support at 128.00 and key resistance now at 135.50. The general trend is to the downside as far as 141.44 remains intact with targets at 100.00 followed by 88.97 levels. Support: 132.75, 132.00, 131.45, 130.95, 130.05 Resistance: 133.60, 134.25, 134.85, 135.50, 136.00 Recommendation: According to our analysis, we believe that it is good to sell the pair again at 133.25 with targets at 131.25 and stop loss at 135.00. EUR/GBP Despite all these upside actions, the royal pair is still forming the previous mentioned left shoulder of the anticipated classical bearish pattern so that we didn't change neither our intraday nor the short term trading overview towards testing the projected neck line around 0.9200 zones as shown on the above chart. Now we expect a reversal pattern around the current areas at 0.9400 while indicators are showing over bought signals. Trading range is among the key support 0.9160 and key resistance now at 0.9560. The general trend is to the upside as far as 0.8020 area remains intact with targets at 1.0000 followed by 1.0400 levels. Support: 0.9350, 0.9310, 0.9280, 0.9260, 0.9205 Resistance: 0.9420, 0.9455, 0.9480, 0.9530, 0.9600 Recommendation: According to our analysis, we believe that it is good to sell the pair at 0.9400 with targets at 0.9310 and stop loss at 0.9480. Ecpulse disclaimer: The content of ecPulse.com and any page in the website contain information for investors/traders and is not a recommendation to buy or sell currencies, stocks, gold, silver & energies, nor an offer to buy or sell currencies, stocks, gold, silver & energies. The information provided reflects the writers' opinions that deemed reliable but is not guaranteed as to accuracy or completeness. ecPulse is not liable for any losses or damages, monetary or otherwise that result. I recommend that anyone trades currencies, stocks, gold, silver & energies should do so with caution and consult with a broker before doing so. Prior performance may not be indicative of future performance. Currencies, stocks gold, silver &energies presented should be considered speculative with a high degree of volatility and risk

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Daily Technical Analysis

Daily Forex Technicals | Written by FX Instructor | Mar 27 09 01:27 GMT |

EURUSD Outlook EURUSD still made no significant movement yesterday, trapped between 1.3735 - 1.3435 area. We have no clear direction so far and remain in the 'no trade zone'. Daily CCI just cross the 100 line down suggesting a potential bearish view, but as long as price stay above 1.3435 the bearish scenario is not yet confirmed. Consistent movement below 1.3435 could trigger further bearish momentum targeting 1.2990 area. EURUSD Daily Supports and Resistances: S1= 1.3467 S2= 1.3408 S3= 1.3323 R1= 1.3611 R2= 1.3696 R3= 1.3755 GBPUSD Outlook The GBPUSD had another bearish momentum yesterday. On 4h chart we can see that the pair is now in a very important phase where price testing the support trendline. The bias is bearish in nearest term but I think it's better to wait until the trendline support violated to the downside before jump into the market targeting 1.4250 area. CCI just cross the -100 line up on hourly chart so watch out for a potential upside pressure testing 1.4510 resistance area. GBPUSD Daily Supports and Resistances: S1= 1.4375 S2= 1.4291 S3= 1.4161 R1= 1.4589 R2= 1.4719 R3= 1.4803 USDJPY Outlook The USDJPY had a significant bullish momentum yesterday. On 4h chart we can see that the trendline resistance has been violated to the upside suggesting potential bullish scenario. The bias is bullish in nearest term targeting 99.70 area. However CCI about to cross the 100 line down on hourly chart so watch out for a potential downside rebound testing 98.00/30 support area. USDJPY Daily Supports and Resistances: S1= 97.87 S2= 96.94 S3= 96.45 R1= 99.29 R2= 99.78 R3= 100.71 USDCHF Outlook Still no significant movement. Keep stay away from the market until we have a valid breakout/down from the choppy area (1.1360 - 1.1170). Daily CCI about to cross the -100 line up suggesting a potential bullish view. Break above 1.1360 could trigger further bullish momentum targeting 1.1470 area. USDCHF Daily Supports and Resistances: S1= 1.1205 S2= 1.1140 S3= 1.1099 R1= 1.1311 R2= 1.1352 R3= 1.1417 FX Instructor LLC www.fxinstructor.com The information has been prepared for information purposes only. The document is not intended as personalized investment advice and does not constitute a recommendation to buy, sell or hold investments described herein. This information contained herein is derived from sources we believe to be reliable, but of which we have not independently verified. FXInstructor LLC assumes no responsibilities for errors, inaccuracies or omissions in these materials, nor shall it be liable for damages arising out of any person's reliance upon this information. FXInstructor LLC does not warrant the accuracy or completeness of the information, text, graphics, links or other items contained within these materials. FXInstructor LLC shall not be liable for any indirect, incidental, or consequential damages including without limitation losses, lost revenues or lost profits that may result from these materials. Opinions and estimates constitute our judgment and are subject to change without notice. Past performance is not indicative of future results

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Japan March Consumer Price Index: Statistical Summary (Table)

By Shizuka Muragishi

March 27 (Bloomberg) -- Following is a summary of Japan’s consumer price index from the Ministry of Internal Affairs and Communications in Tokyo.

================================================================================
                      March   Feb.   Jan.   Dec.   Nov.   Oct.  Sept.   Aug.
                       2009   2009   2009   2008   2008   2008   2008   2008
================================================================================
                      ---------------Year-on-Year- Percent Change--------------
Tokyo:
CPI                     0.2%   0.5%   0.5%   0.8%   1.1%   1.2%   1.4%   1.3%
CPI core                0.4%   0.6%   0.5%   0.8%   1.1%   1.5%   1.7%   1.5%
 ex-food, energy       -0.4%  -0.1%  -0.3%   0.2%   0.2%   0.4%   0.5%   0.2%
National:
CPI                     n/a   -0.1%   0.0%   0.4%   1.0%   1.7%   2.1%   2.1%
CPI core                n/a    0.0%   0.0%   0.2%   1.0%   1.9%   2.3%   2.4%
 ex-food, energy        n/a   -0.1%  -0.2%   0.0%   0.0%   0.2%   0.2%   0.0%


================================================================================
                      March   Feb.   Jan.   Dec.   Nov.   Oct.  Sept.   Aug.
                       2009   2009   2009   2008   2008   2008   2008   2008
================================================================================
                      --------------Month-on-Month Percent Change--------------
Tokyo:
CPI                    -0.1%   0.1%  -0.4%  -0.2%   0.0%   0.0%   0.0%  -0.1%
CPI core               -0.1%   0.1%  -0.2%  -0.1%  -0.3%  -0.1%   0.1%   0.0%
 Ex-food, energy       -0.3%   0.0%  -0.3%   0.0%  -0.1%   0.0%   0.2%  -0.1%
CPI (nsa)               0.3%  -0.3%  -0.6%  -0.1%  -0.4%  -0.1%   0.3%   0.1%
CPI core (nsa)          0.3%  -0.1%  -0.7%  -0.2%  -0.4%   0.0%   0.2%   0.2%
 Ex-food, energy (nsa)  0.3%  -0.2%  -1.1%   0.0%  -0.2%   0.0%   0.3%   0.2%
National:
CPI                     n/a    0.1%  -0.4%  -0.5%  -0.4%  -0.1%  -0.1%  -0.1%
CPI core                n/a    0.2%  -0.2%  -0.5%  -0.6%  -0.2%  -0.1%   0.0%
 ex-food, energy        n/a    0.1%  -0.2%   0.0%  -0.1%   0.0%   0.1%   0.0%
CPI (nsa)               n/a   -0.3%  -0.6%  -0.4%  -0.9%  -0.1%   0.0%   0.3%
CPI core (nsa)          n/a   -0.1%  -0.6%  -0.5%  -0.8%  -0.2%   0.0%   0.2%
 ex-food, energy (nsa)  n/a   -0.2%  -0.8%   0.0%  -0.2%   0.1%   0.2%   0.1%
================================================================================

NOTE: CPI core excludes fresh food. Month-on-month percent changes are seasonally adjusted, unless otherwise noted. Year-on-year percent changes are not seasonally adjusted. Index: 2005=100

SOURCE: Ministry of Internal Affairs and Communications

To contact the reporter on this story: Shizuka Muragishi in Tokyo at smuragishi@bloomberg.net

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Thai Economy May Need ‘Other Tools’ as Rates Fall, Atchana Says

By Anchalee Worrachate

March 27 (Bloomberg) -- Thailand’s central bank may cut its benchmark interest rate again and is looking at other tools to aid the economy, which will probably contract this year, Deputy Governor Atchana Waiquamdee said.

“There is room for the interest rate to fall further if needed by the economy,” Atchana, who was attending the Sovereign Wealth Management Conference in London yesterday, said in an interview. “This doesn’t mean that the interest rate is our only tool to deal with the economy.”

Central banks across the world have shifted their focus to unconventional measures to bolster growth after moving benchmark borrowing costs close to zero. The Bank of Thailand cut its own interest rate on Feb. 25 to 1.5 percent to buoy demand after consumer prices declined and the economy shrank for the first time this century.

If the interest rate “falls to a certain level, and it doesn’t have to be zero, yet the transmission mechanism still doesn’t work, we have to look at other tools to make our policy more efficient,” Atchana said. “They are being studied.”

Thai central bank Governor Tarisa Watanagase also said this week that the central bank is prepared to reduce interest rates further if required. If the bank then chose to adopt alternative measures, it would join a host of counterparts including the Bank of England, which has started printing money and spending it on assets including government bonds and corporate debt.

GDP Forecast

Thailand’s finance ministry this week forecast that gross domestic product may fall as much as 3 percent this year as exports slide and unemployment climbs.

Exports, which make up 70 percent of Thailand’s economy, have fallen for four months as the global economic recession curbed demand for Thai products. The Bank of Thailand will hold the next interest rate meeting on April 8.

“There is a very slim chance that the Thai economy will grow this year,” Atchana said. “The economy may actually contract, the question is by how much. We might have a clearer picture when we get the new staff forecasts on April 8.”

The Bank of Thailand has no plan to “resist the trend” in the foreign exchange markets even after the Thai baht strengthens, said Atchana.

The baht has risen as much as 2.6 percent against the dollar since the beginning of the month. Atchana said the baht, along with regional currencies, are rising “by default” because of the weakness of the dollar.

“We have no preference for the baht to be weak or strong,” she said. “Exchange rates alone are not the only key factor driving trades, what is more important is the income of our trading partners. We monitor the baht to make sure it doesn’t overshoot or undershoot regional currencies and affect our competitiveness.”

To contact the reporter on this story: Anchalee Worrachate in London at aworrachate@bloomberg.net.

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Japan Retail Sales Fall Most in Seven Years, Inflation Stalls

By Jason Clenfield and Mayumi Otsuma

March 27 (Bloomberg) -- Japan’s retail sales fell the most in seven years in February and the economy moved closer to deflation as pay cuts and the specter of job losses discouraged spending by consumers.

Sales declined 5.8 percent from a year earlier, the Trade Ministry said today in Tokyo. Consumer prices excluding fresh food were unchanged from a year earlier, the statistics bureau said.

An unprecedented drop in exports is forcing companies to fire workers and cut wages, weakening household spending and pushing the nation closer to its worst recession in the postwar era. A shrinking economy may herald a return to the deflation that plagued Japan for almost a decade until 2005.

“Clearly the consumer has taken a shock,” said Richard Jerram, chief economist at Macquarie Securities Ltd. in Tokyo. “The pain in manufacturing has led to greater insecurity, and it seems to have damaged consumer spending.”

Investors shrugged off the retail drop, which was worse than the 3 percent economists predicted. The Topix index rose 1.7 percent at 10:32 a.m. in Tokyo, heading for its best week in more than 16 years as better-than-expected earnings by U.S. companies fueled speculation the global recession is abating. The yen was little changed at 98.68 per dollar.

While unemployment hasn’t risen as much as in the U.S. or Europe, workers are facing wage declines that are leaving them with less money to spend, forcing retailers to lower prices.

Store Discounts

Aeon Co., Japan’s largest supermarket operator, last week said it will offer discounts on 5,100 items this month. Rivals Ito-Yokado Co. and Seiyu Ltd. already cut prices of food, clothing and household products this month.

Excluding food and energy, prices fell 0.1 percent in February, a second monthly decline. Finance Minister Kaoru Yosano said it was “too early” to conclude that the drop meant Japan has slid back to deflation.

Core prices in Tokyo rose 0.4 percent in March from a year earlier, slower than the 0.6 percent in February.

“There are many reasons we have to worry about a return of deflation,” said Azusa Kato, an economist at BNP Paribas in Tokyo. “Companies may race to discount to get rid of inventories if they keep posting losses, and wage cuts and bankruptcies will spread in coming months.”

Wages dropped for a third month in January. Overtime pay fell by a record 14.8 percent as companies shut factory lines and canceled work shifts.

‘Running Into Trouble’

“The last few years were the good years, and pay didn’t rise,” said Martin Schulz, a senior economist at Fujitsu Research Institute in Tokyo. “Now you’ve got overtime and bonuses falling and people are running into trouble.”

J. Front Retailing Co., the holding company that operates department stores Daimaru Inc. and Matsuzakaya Co., said sales slid 15 percent in February as shoppers cut back on clothing and luxury items.

Still, the retail slump may have been overstated because there were fewer shopping days in February compared with the same month in 2008, a leap year. About half the declines were owing to a drop in revenue at gasoline retailers, reflecting crude oil’s 59 percent slide last month from a year earlier.

Also, the retail report doesn’t account for the growing share of money spent through the internet or on services.

Consumer spending fell 0.4 percent last quarter from the previous three months, a fraction of the record 13.8 percent drop in exports that drove the worst quarterly contraction in gross domestic product since the 1974 oil crisis.

The resilience of the job market may be the reason consumers haven’t pulled back further. The export slump has yet to trigger job losses of the scale seen in the U.S., where the unemployment rate jumped to 8.1 percent last month. Japan’s jobless rate has risen 0.3 percentage point to 4.1 percent since the recession deepened in October.

To contact the reporters on this story: Jason Clenfield in Tokyo at jclenfield@bloomberg.net; Toru Fujioka in Tokyo at tfujioka1@bloomberg.net

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New Zealand Economy Shrinks 0.9% as Recession Deepens

By Tracy Withers

March 27 (Bloomberg) -- New Zealand’s economy shrank last quarter by the most in more than 16 years as home building tumbled, exports fell and businesses cut spending.

Gross domestic product declined 0.9 percent from the third quarter, when it fell a revised 0.5 percent, Statistics New Zealand said in Wellington today. That was less than the median estimate of a 1.1 percent drop in a Bloomberg survey of nine economists.

New Zealand is mired in its worst recession in more than three decades as manufacturing contracts, export demand slows and the housing market slumps. Central bank Governor Alan Bollard said this month the economy won’t begin growing until the second half of 2009, a sign he will keep cutting interest rates to revive domestic demand.

“Interest rates haven’t troughed at 3 percent,” said Annette Beacher, a senior strategist at TD Securities Ltd. in Sydney. “Almost everything has fallen off a cliff. It’s too soon to be talking about a recovery.”

Bollard reduced the official cash rate to a record-low 3 percent on March 12. He will pare the rate by at least a quarter-point to 2.75 percent at his next review on April 30, according to 12 of 13 economists surveyed by Bloomberg.

New Zealand’s dollar rose to 57.69 U.S. cents at 11:30 a.m. in Wellington from 57.46 cents before the report was released as traders reduced bets that Bollard will lower borrowing costs next month.

Global Recession

The economy shrank 1.9 percent from a year earlier, today’s report showed. In 2008, gross domestic product rose 0.2 percent from 2007, the weakest annual-average growth since 1998.

The quarterly decline was the most since the third quarter of 1992.

New Zealand joined Japan, Europe and the U.S. in sinking into a recession last year as the global credit crisis buffeted consumer and business confidence and cooled global trade. The U.S. economy contracted 1.6 percent in the fourth quarter, Japan shrank 3.2 percent and Australia declined 0.5 percent.

The World Trade Organization forecasts international trade will shrink 9 percent in 2009, the most since World War II. Exports account for about 30 percent of New Zealand’s NZ$180 billion economy.

Slowing demand has caused companies to reduce hours and fire workers. Sealord Group Ltd., the nation’s largest fishing company, said this month it will fire 180 workers at a factory in Nelson. Fisher & Paykel Appliances Holdings Ltd. is adopting a 35-hour week at its refrigerator plant in Auckland, enabling it to protect 60 jobs, it said this week.

Household Spending

The International Monetary Fund said yesterday New Zealand’s economy will shrink 2 percent in 2009 because households are constrained by debt and workers are worried they may lose their jobs. About 57 percent of consumers expect the economy will worsen this year, according to a Westpac Banking Corp./McDermott Miller survey published March 25.

Household spending, which makes up 60 percent of the economy, was unchanged in the fourth quarter after falling for the first nine months of the year. Purchases of durable items such as furniture and home appliances declined 1.4 percent, today’s report showed. Sales of food and other so-called non- durable goods also fell. Spending on services increased, led by domestic air travel.

Warehouse Group Ltd., New Zealand’s biggest discount retailer, reported a 24 percent decline in profit in the six months ended Jan. 25 after sales dropped. Retail spending will likely stay weak as rising unemployment weighs on consumer confidence, Chief Executive Officer Ian Morrice said on a conference call this month.

Housing, Investment

Total investment dropped 5.3 percent, led by spending on new housing, which slumped 14 percent in the fourth quarter, the fifth straight decline.

Business investment fell 1.8 percent as companies purchased fewer vehicles, plant and machinery. Commercial construction rose.

Exports of goods and services declined 3.3 percent in the quarter amid lower shipments of meat, fish and logs plus reduced less spending by visiting tourists. Import volumes declined 0.6 percent, led by passenger cars.

Output from goods-producing industries slipped, led by a 3.8 percent drop in manufacturing and declining home building. Primary production rose, driven by output from dairy farms that offset a decline in mining. Service industries output increased, led by finance and insurance.

The GDP deflator, a measure of prices, rose 4.8 percent in the year ended Dec 31.

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

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China Chastises West in Leadership Bid Before G-20 Gathering

By Li Yanping and Kevin Hamlin

March 27 (Bloomberg) -- China is scolding the world before the Group of 20 meeting next week, telling the largest countries to spend more on stimulus and fix their financial supervision.

Central bank Governor Zhou Xiaochuan yesterday lambasted governments that failed to emulate China’s “decisive” action to spur economic growth. Earlier this week he suggested creating a new international reserve currency to rival the dollar.

Evidence that China’s 4 trillion yuan ($585 billion) stimulus package is taking effect is emboldening the nation’s leaders to dictate their vision for a new world economic and financial order. Premier Wen Jiabao said this month he was worried about the value of China’s $740 billion in U.S. Treasury holdings and asked for a guarantee of their safety.

“China can stand up and say, ‘Our policies have worked, we have stabilized our economy first,’” said Glenn Maguire, chief Asia-Pacific economist at Societe Generale SA in Hong Kong. “China is positioning itself to have a much more significant role and influence at this G-20 meeting than it has at any other international forum in the past.”

Leaders of the 20 largest industrial and developing nations meet in London on April 2 to look for ways to alleviate the global financial crisis and strengthen international regulation. The World Bank this month said the global economy will probably shrink for the first time since World War II.

China Recovery?

China’s leaders, including Zhou and President Hu Jintao, will be able to justify their policy prescriptions by pointing to signs of recovery in their economy, which last year surpassed Germany’s to become the world’s third-largest by output.

Urban fixed-asset investment jumped 26.5 percent in the first two months from a year earlier, new bank lending quadrupled in February and vehicle sales rose 25 percent the same month. The 30 percent gain in the Shanghai Composite Index this year makes it the best-performing among 89 benchmark measures tracked worldwide by Bloomberg.

The government “has taken prompt, decisive and effective policy measures, demonstrating its superior system advantage when it comes to making vital policy decisions,” Zhou wrote in an article published on the central bank’s Web site yesterday.

“China’s taking the offensive,” said Jun Ma, chief China economist at Deutsche Bank AG in Hong Kong. “China needs to play a much more prominent role in the run-up to the G-20 because it is a critical moment to participate in the new design and architecture of the global financial system.”

20 Million Jobless

China’s 6.8 percent expansion in the fourth quarter from the same period a year earlier lagged behind its 9 percent growth for all of 2008 and 13 percent for 2007. Exports have dropped at a record pace, forcing thousands of factories to close and leaving about 20 million migrant workers jobless.

That hasn’t stopped a steady stream of instructions to the rest of the world in recent days. Governments need to step up economic stimulus to restore market confidence and fend off trade protectionism, Finance Minister Xie Xuren said in a statement yesterday.

The U.S. is injecting $787 billion into its economy while European stimulus totals 400 billion euros ($542 billion), almost all from individual nations rather than the European Union.

China’s central bank yesterday blamed the financial crisis on “complacency” and a conviction in the U.S. and developed economies that markets always correct themselves.

“Market forces, if unchecked, will lead to asset bubbles and ultimately a disastrous market clearing in the form of a financial crisis like the current one,” the research arm of the People’s Bank of China said in a separate article published on its Web site yesterday.

‘Advanced Countries’

A “lack of coordination among regulatory agencies and communications between regulators and central bankers and finance ministers in some advanced countries” hampered efforts for a financial rescue, the research arm said.

China’s lecturing comes after decades when leaders focused on their own economy and let the U.S. and its allies set the international norms on financial regulation, said Charles Freeman, a former top trade negotiator who covered China at the U.S. Trade Representative’s office in Washington.

“They’ve jockeyed for position, they’ve thought a lot about these things and they are making themselves be heard while the Europeans and the Japanese kind of navel-gaze and sideline themselves,” he said.

Some of Zhou’s recommendations jibe with those of U.S. Treasury Secretary Timothy Geithner, who called for a so-called systemic risk regulator to oversee big financial institutions and federal authority to seize them if they run into trouble.

Extraordinary Means

Zhou said yesterday that governments should consider giving mandates to finance ministries and central banks to use extraordinary means “in order to allow them to act boldly and expeditiously without having to go through a lengthy or even painful approval process.”

In another article this week, also published on the central bank’s Web site, Zhou urged the International Monetary Fund to expand the use of so-called Special Drawing Rights and move toward a “super-sovereign reserve currency.”

“Zhou is clearly trying to establish himself and China as taking a lead position in shaping the global response to the crisis,” said Mark Williams, a London-based economist at Capital Economics Ltd. “A more engaged China is something the world should welcome.”

To contact the reporters on this story: Li Yanping in Beijing at yli16@bloomberg.netKevin Hamlin in Beijing at khamlin@bloomberg.net

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Australian, New Zealand Dollars Head for Best Month Since 1985

By Candice Zachariahs

March 27 (Bloomberg) -- The Australian and New Zealand dollars headed for their biggest monthly advances against the greenback in more than 20 years, as commodities prices and global equities rallied, boosting demand for the nations’ assets.

The currencies may advance for a fourth week as investors pare expectations of further Australian and New Zealand interest-rate cuts and policy makers in the U.S., U.K. and Japan flood their economies with cash to hold down borrowing costs. New Zealand’s dollar climbed as a report showed the economy shrank less than some economists forecast.

“There has been a clear strengthening trend in commodity prices and that’s helping boost commodity currencies, particularly those like Australia and New Zealand where the central banks are a long way away from entering quantitative easing,” said John Horner, a currency strategist at Deutsche Bank AG in Sydney.

Australia’s currency was little changed at 70.17 U.S. cents as of 11:26 a.m. in Sydney, from 70.16 cents late in New York yesterday. The currency slipped 0.3 percent to 69.06 yen.

New Zealand’s dollar advanced to 57.77 U.S. cents from 57.46 cents before the gross domestic product report and 57.55 cents yesterday. It bought 56.87 yen from 56.79 yen.

The currencies will find buyers toward 72.50 U.S. cents for the Australian dollar and 60 U.S. cents for New Zealand’s, near their highs for this year, said Horner.

Australia’s dollar advanced 9.8 percent this month, the most since 1973, paring its decline this year to 0.1 percent. The so-called kiwi has gained 15 percent against the greenback, its largest advance since 1985, and helping it pare this year’s loss to 0.2 percent.

The so-called Aussie rose 11 percent this month against the yen, the most since 1995. The New Zealand dollar gained 16.6 percent versus Japan’s currency, the most since 1985.

New Zealand Recession

New Zealand’s dollar rose as GDP declined 0.9 percent from the third quarter, the most in 16 years, Statistics New Zealand said in Wellington today. The median estimate in a Bloomberg survey of nine economists was for a 1.1 percent drop.

The data “wasn’t as bad as people had feared,” said Khoon Goh, a senior economist at ANZ National Bank Ltd. in Wellington. Still, “the currency at current levels could extinguish the recovery the Reserve Bank forecast for the second half of this year.”

A strong currency reduces the local value of overseas sales of the nation’s companies. The currency’s gains may add pressure on central bank Governor Alan Bollard to trim interest rates from a record-low 3 percent.

Traders are betting on a 72 percent chance of a 25 basis point cut from the Reserve Bank of New Zealand when it meets April 30, according to a Credit Suisse Group AG index based on swaps trading. Australia’s central bank will probably cut by 25 basis points to 3 percent, a separate credit Credit Suisse index shows. A basis point is 0.01 percentage point.

Commodities, Equities, Rates

The premium on 10-year Australian debt climbed to 1.79 percentage points over U.S. Treasuries of the same maturity, while the gap for New Zealand gained to 2.41 percentage points.

The South Pacific countries’ currencies also gained as the UBS Bloomberg Constant Maturity Commodity Index of 26 raw materials rose 1 percent yesterday. Crude oil and gold, Australia’s third and fourth most-valuable commodity exports, advanced. The index has added 5 percent this year.

U.S. stocks climbed yesterday after Best Buy Co., the nation’s largest electronics chain, announced better-than- forecast earnings. That helped extend the MSCI World Index’s best month of gains since 1975.

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 risk in such trades is that currency market moves will erase profits.

Australian Bonds

Australia today sold A$600 million ($421 million) of securities maturing March 2019 at a weighted average yield of 4.55 percent. The so-called bid-to-cover ratio at the auction was 3.

Australian government bonds fell for a sixth day, the longest stretch of losses since February 2008. The yield on 10- year notes rose three basis points, or 0.03 percentage point, to 4.55 percent, according to data compiled by Bloomberg. The price of the 5.25 percent security due March 2019 slipped 0.24, or A$2.40 per A$1,000 face amount, to 105.57.

New Zealand’s two-year swap rate, a fixed payment made to receive floating rates, fell to 3.81 percent from 3.83 yesterday.

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

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Yen Heads for Sixth Weekly Loss Versus Euro as Stocks Advance

By Yasuhiko Seki and Ron Harui

March 27 (Bloomberg) -- The yen headed for a sixth weekly decline against the euro as stocks rallied worldwide on optimism the worst of the global economic slump is over, sapping demand for the currency as a refuge.

The Japanese currency headed for its worst month against the euro since December 2000 as a government report today showed retail sales fell the most in seven years. The Australian and New Zealand dollars strengthened versus the greenback, heading for their biggest monthly gains in more than 20 years, as a gain in commodity prices increased demand for the two nations’ assets.

“The anxiety about credit risks is now easing thanks to aggressive policy action in the U.S.,” said Akio Yoshino, chief economist in Tokyo at Societe Generale Asset Management (Japan) Co., a unit of the French asset management firm that supervises the equivalent of $338 billion. “Prospects for stock markets have improved, allowing investors to reinvest in higher-yielding currencies, which were sold in times of crisis.”

The yen traded at 133.57 against the euro as of 10:01 a.m. in Tokyo from 133.52 late yesterday in New York and 130.29 a week ago. Japan’s currency was at 98.46 versus the dollar from 98.71 yesterday. The euro traded at $1.3559 from $1.3526.

New Zealand’s dollar rose to 57.81 U.S. cents from 57.55 cents yesterday, and Australia’s currency advanced to 70.25 U.S. cents from 70.16 cents.

The Nikkei 225 Stock Average headed for a third weekly gain, adding 1.6 percent today, and the MSCI Asia Pacific Index of regional shares gained 1.4 percent. The Standard & Poor’s 500 Index advanced 2.3 percent yesterday.

Japan’s Economy

The yen has also lost its appeal as concern intensified about the deterioration of the world’s second-biggest economy.

“Economic conditions are poor and the political situation is shaky,” said Ryohei Muramatsu, manager of Group Treasury Asia in Tokyo at Commerzbank AG, Germany’s second-largest lender. “These hurt confidence in the yen.”

Japanese retail sales fell 5.8 percent in February from a year earlier, after declining 2.4 percent in January, the Trade Ministry said today in Tokyo. Consumer spending accounts for nearly 55 percent of Japan’s gross domestic product. Consumer prices excluding fresh food were unchanged last month from a year earlier, a separate government report today.

The yen fell 7.5 percent this month against the euro, heading for its biggest loss since a 10.8 percent decline in December 2000.

Ministers Resign

Senior Vice Finance Minister Koichi Hirata resigned yesterday after he sold 616 million yen ($6.2 million) of shares this month. Japan adopted a code of conduct in 2001 that advises government ministers not to directly trade securities.

Finance Minister Shoichi Nakagawa quit in February amid accusations he was drunk at a press conference, raising questions about Prime Minister Aso Taro’s leadership of the ruling Liberal Democratic Party before elections that must be called by September.

The yen headed for its first quarterly loss against the dollar since June, dropping 8.1 percent as Japan’s export- oriented economy shrank an annualized 12 percent last quarter, the biggest contraction since 1974.

Demand for the yen may be boosted on speculation Japanese companies and investors will repatriate earnings generated outside the nation before the fiscal year ends on March 31.

“It’s quarterly and fiscal year-end, so there’s talk that Japanese life insurers and exporters will need to buy the yen,” said Lee Wai Tuck, a currency strategist at Forecast Pte in Singapore. “This is a last-minute kind of thing.”

Japan’s currency was the biggest gainer in 2008 among the 171 currencies tracked by Bloomberg as the global financial meltdown led investors to buy assets perceived as safe.

Aussie and Kiwi

The Australian and New Zealand dollars also rose on speculation the central banks are near the end of reducing interest rates.

Australia’s dollar has appreciated 10 percent this month, the most since February 1973. New Zealand’s currency has gained 15 percent against the greenback, its largest advance since August 1985.

Traders reduced to 25 basis points their expectations of the next cuts by policy makers in Australia and New Zealand, according to Credit Suisse Group AG indexes. Benchmark rates are 3.25 percent in Australia and 3 percent in New Zealand, compared with 0.1 percent in Japan and as low as zero in the U.S., attracting investors to the South Pacific nations’ higher- yielding assets. The risk in such trades is that currency market moves will erase profits.

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

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Japanese Stocks Rise on U.S. Earnings; Property Trusts Advance

By Masaki Kondo

March 27 (Bloomberg) -- Japanese stocks rose, driving the Topix index toward its best week in more than 16 years, as better-than-expected earnings at U.S. companies boosted speculation the global recession is abating.

Canon Inc., the world’s biggest digital-camera maker, gained 5.9 percent after U.S. electronics retailer Best Buy Co. reported earnings that topped analysts’ estimates. Nomura Real Estate Office Fund Inc. advanced 7.7 percent on a newspaper report the government may buy properties from real estate investment trusts. Nippon Yusen K.K. sent shipping lines lower after reporting an 88 percent tumble in profit.

“U.S. consumer spending appears to be picking up,” Mitsushige Akino, who oversees the equivalent of $615 million at Tokyo-based Ichiyoshi Investment Management Co., said in an interview with Bloomberg Television. “The market will remain resilient, though technical indicators indicate it is overheating.”

The Nikkei 225 Stock Average climbed 165.68, or 1.9 percent, to 8,802.01 as of 10:34 a.m. in Tokyo. The broader Topix index rose 14.50, or 1.8 percent, to 841.31. The Nikkei is set for an 11 percent gain this week, while the Topix is poised to add 10 percent, the most since August 1992.

The Nikkei is en route for a 16 percent advance in March for the steepest monthly leap since January 1994. The gauge’s members traded at 97.3 times their estimated net income for this fiscal year, the highest since May 2003, according to Nikkei Inc.

Earnings Surprise

In New York, the Standard & Poor’s 500 Index climbed 2.3 percent, after Best Buy, the largest U.S. electronics retailer, yesterday reported fourth-quarter earnings that were 15 percent higher than what analysts had anticipated. ConAgra Foods Inc., the maker of Banquet frozen dinners, also beat analyst estimates as material costs fell.

Canon, which earns a third of its sales from the Americas, jumped 5.9 percent to 3,140 yen, while Sony Corp., the world’s second-biggest maker of consumer electronics, added 3.2 percent to 2,285 yen. Sharp Corp., maker of Aquos-brand televisions, climbed 4.8 percent to 878 yen.

Elpida Memory Inc., Japan’s top maker of computer-memory chips, leapt 8.7 percent to 714 yen. NEC Electronics Corp., No. 3, added 3.3 percent to 680 yen. Prices for the benchmark 1- gigabit memory chip soared 14 percent yesterday, the most since Feb. 2, according to Taipei-based Dramexchange Technology Inc., operator of Asia’s biggest spot market for chips.

Nomura Real Estate Office Fund rose 7.7 percent to 561,000 yen, and Orix JREIT Inc. added 5.5 percent to 383,000 yen. Mitsui Fudosan Co., the nation’s biggest property developer, advanced 5.1 percent to 1,248 yen, while Orix Corp., which develops real estate and provides corporate loans, climbed 9.1 percent to 4,070 yen.

REIT Support

Japan’s ruling coalition is studying the creation of a 1 trillion yen ($10.2 billion) fund to buy property from real estate investment trusts, the Nikkei newspaper reported today, without saying where it got the information. The Tokyo Stock Exchange REIT Index, which tracks 40 such funds, has fallen 43 percent in the past year as tighter bank lending contributed to a series of bankruptcies in the real estate sector.

Nippon Yusen, the nation’s No. 1 shipping line, sank 1.9 percent to 423 yen, leading its peers to the biggest decline among 33 industry groups on the Topix. Net income for the 12 months to March 31 has dropped to a 10th of the year-ago level, a preliminary earnings statement from the company showed yesterday. Nikko Citigroup Ltd. recommended selling the stock.

Nikkei futures expiring in June added 0.8 percent to 8,780 in Osaka and gained 0.7 percent to 8,775 in Singapore.

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

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Asian Stocks Rise in Biggest Weekly Rally Since 1998; BHP Rises

By Hanny Wan and Masaki Kondo

March 27 (Bloomberg) -- Asian stocks climbed in the regional benchmark index’s biggest weekly rally since 1998, as higher commodity prices and better-than-estimated earnings at U.S. companies boosted optimism the global recession is abating.

BHP Billiton Ltd., the world’s No. 1 mining company, climbed 1.4 percent in Sydney after prices for oil and metals advanced. Canon Inc., the world’s biggest camera maker, gained 4.2 percent in Tokyo as U.S. electronics retailer Best Buy Co. reported profit that topped analysts’ estimates. Mizuho Financial Group Inc., Japan’s No. 2 listed bank, added 1.3 percent on plans to reduce shareholdings.

“U.S. consumer spending appears to be picking up,” Mitsushige Akino, who oversees the equivalent of $615 million at Tokyo-based Ichiyoshi Investment Management Co., said in an interview with Bloomberg Television. “The market will remain resilient, though technical indicators indicate it is overheating.”

The MSCI Asia Pacific Index rose 1.3 percent to 86.58 as of 9:54 a.m. in Tokyo. The gauge jumped 8.9 percent this week, its best weekly performance since the week ended Oct. 9, 1998. The gauge advanced 23 percent from a five-year low on March 9, technically entering a bull market, amid optimism central banks and governments are succeeding in their efforts to revive economic growth.

Japan’s Nikkei 225 Stock Average gained 0.8 percent, while Australia’s S&P/ASX 200 Index advanced 1.2 percent. All markets advanced except New Zealand.

Higher Valuations

Futures on the Standard & Poor’s 500 Index were little changed. The gauge climbed 2.3 percent yesterday, after Best Buy, the largest U.S. electronics retailer, reported fourth-quarter earnings that were 15 percent higher than analysts had anticipated. ConAgra Foods Inc., the maker of Banquet frozen dinners, also beat analyst estimates as material costs fell.

Canon advanced 4.2 percent to 3,090 yen. Sony Corp., the world’s second-largest consumer-electronics maker, rose 2.9 percent to 2,280 yen.

Gains in stocks raised the average valuation of companies on the MSCI Asia Pacific Index yesterday to 16.9 times profit, the highest level since December 2007, data compiled by Bloomberg show. The gains pared the index’s drop this year to 3.7 percent, while the MSCI World Index lost 8.4 percent. Both are set for their sixth-straight quarterly declines.

BHP climbed 1.4 percent to A$34.25. Rio Tinto Group, the world’s third-largest mining company, added 6.1 percent to A$58.05.

Crude oil added 3 percent to $54.34 a barrel in New York yesterday, the highest settlement since Nov. 28. A measure of six primary metals traded in London rose 2.6 percent, the first gain in three days.

Mizuho climbed 1.3 percent to 233 yen. The company is aiming to reduce its 2.9 trillion-yen ($29.5 billion) stockholdings to 2 trillion yen, Takashi Tsukamoto, who will become Mizuho’s chief executive officer on April 1, said in an interview. Losses on equity investments brought about two straight quarterly deficits at Mizuho, forcing the bank to raise $4.4 billion to shore up capital.

To contact the reporters for this story: Hanny Wan in Hong Kong at hwan3@bloomberg.net; Masaki Kondo in Tokyo at mkondo3@bloomberg.net.

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