PetroChina Falls Most in 7 Months After Profit Slumps

By Bloomberg News

Oct. 29 (Bloomberg) -- PetroChina Co., the world’s second- most valuable company, had its biggest decline in seven months in Hong Kong trading after earnings missed estimates.

The shares dropped as much as 5.9 percent to HK$9.36, the steepest decline since March 30, and traded at HK$9.46 at 12:20 p.m. local time. PetroChina has climbed 39 percent in Hong Kong this year, lagging behind the 48 percent gain in the benchmark Hang Seng Index.

The Beijing-based oil producer and refiner yesterday posted a 24 percent drop in third-quarter profit to 30.8 billion yuan ($4.5 billion) as crude slumped from a record. The median estimate of five analysts surveyed by Bloomberg was for a profit of 35 billion yuan. Sales fell 12 percent to 267.7 billion yuan.

Earnings may rebound this quarter as China’s economy leads the world out of recession, boosting oil prices and demand for gasoline and diesel. The government has relaxed controls on fuel prices and may raise them to reflect higher crude costs, benefiting PetroChina as it boosts investment in refineries.

“Refining margins are down as increases in prices of refined products have not kept up with crude,” Wang Aochao, a Shanghai-based analyst at UOB-Kay Hian Ltd., said today. “I’m confident that as oil rises, the government increases prices and demand strengthens, the prospects for the company are good.”

Refining Margin

Wang estimates PetroChina’s refining margin slumped to $3 a barrel in the third quarter from $7.50 in the preceding three months. The company didn’t publish figures for gains from processing oil into fuels.

Sales of refined products accounted for 80 percent of PetroChina’s revenue in 2008 and oil exploration the rest.

Oil, down 42 percent last quarter from a year earlier, has climbed 73 percent in 2009.

Goldman Sachs Group Inc. on Oct. 26 reaffirmed its forecast for crude oil to reach $85 a barrel by the end of this year on “robust” demand for diesel in China.

The world’s fastest-growing major economy expanded 8.9 percent in the third quarter, the quickest pace in a year.

“The fourth quarter will compare favorably,” said Gordon Kwan, the Hong Kong-based head of energy research at Mirae Asset Securities. Kwan forecasts PetroChina’s net income will climb 63 percent to 34 billion yuan in the three months ending Dec. 31 from a year earlier.

Energy Stocks Fall

Shares of Asian energy companies also fell as crude futures declined for a second day after an increase in U.S. crude and gasoline inventories raised concern that fuel demand has yet to recover. Oil for December delivery dropped as much as 43 cents, or 0.6 percent, to $77.03 a barrel, and traded at $77.20 at 12:38 p.m. Hong Kong time on the New York Mercantile Exchange.

The 43 member MSCI Asia Pacific Energy Index fell as much as 3.1 percent, the most since Aug. 17. China Petroleum & Chemical Corp., the country’s second-largest oil company and biggest refiner, fell as much as 2.4 percent to HK$6.56 and traded at HK$6.62. The company known as Sinopec is reports earnings today.

PetroChina’s Shanghai-listed shares fell as much as 2.8 percent and traded at 13.18 yuan.

China, the world’s second-biggest energy user, raised fuel prices four times and cut them three times this year, compared with two adjustments in 2008, after the introduction of a pricing mechanism in December to adjust oil-product prices for changes in crude costs and ensure refiners a profit.

Net income declined from 31.5 billion yuan in the second quarter, when it rose 26 percent on record earnings from oil refining after the government raised fuel prices.

Nine-Month Profit

Average gasoline prices in China in the third quarter fell about 1.6 percent from the second and diesel declined 1.8 percent. Crude prices averaged about 14 percent higher in the same period.

Profit in the first nine months dropped 14 percent to 81.3 billion yuan, while sales declined 20 percent to 683 billion yuan, according to yesterday’s statement.

The average realized price for crude fell almost 50 percent to $49.1 a barrel in the first nine months, while the price of gas declined 1.2 percent to $3.4 per thousand cubic feet, the company said. PetroChina processed 607 million barrels of oil into fuels, down 5.5 percent from a year earlier, and its crude output dropped 3.7 percent to 631 million barrels.

PetroChina joined ConocoPhillips and BP Plc in reporting a drop in third-quarter profit. Earnings at ConocoPhillips slumped 71 percent in the same period, while Europe’s second-largest oil company said Oct. 27 profit excluding one-time items and inventory changes fell 47 percent.

To contact the reporters on this story: John Duce in Hong Kong at Jduce1@bloomberg.net; To contact the reporters on this story: Ying Wang in Beijing at ywang30@bloomberg.net;

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Dollar, Yen Decline as Stocks Snap Losses Before GDP Report

By Lukanyo Mnyanda

Oct. 29 (Bloomberg) -- The dollar and the yen declined as U.S. stock-index futures rose before a report that may show the world’s biggest economy exited the recession in the third quarter, stoking demand for higher-yielding currencies.

The dollar snapped four days of gains against the euro, and the yen retreated from a two-week high versus the common European currency, as investors speculated the U.S. economy probably expanded in the three months through September for the first time in more than a year. The Australian dollar recovered from the weakest level in three weeks against the U.S. currency. The Norwegian krone gained the most against the dollar after Norges Bank raised its key interest rate yesterday.

The dollar “isn’t getting too much traction ahead of the GDP number, which is one of the bigger data points to determine whether the U.S. has moved from the recession,” said Jeremy Stretch, a senior currency strategist in London at Rabobank International. “Markets are tentatively trying to put a bit of risk back on the table.”

The dollar was at $1.4743 per euro as of 8:39 a.m. in London, from $1.4706 yesterday in New York. The yen traded at 133.74 per euro, from 133.43 yesterday and 132.81 earlier, the strongest level since Oct. 14. The Japanese currency was at 90.72 per dollar, from 90.75.

Australia’s currency, or the Aussie, rose to 90.30 U.S. cents, from 89.71 cents yesterday and as weak as 89.44 cents earlier today. The krone snapped four days of losses against the dollar to trade at 5.7018, from 5.7454.

Standard & Poor’s 500 Index futures climbed as much as 0.5 percent. Europe’s Dow Jones Stoxx 600 Index added 0.1 percent after declining as much as 0.6 percent.

To contact the reporter on this story: Lukanyo Mnyanda in London at lmnyanda@bloomberg.net

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Oil Is Steady as Economic Optimism Tempers Stockpile Concern

By Grant Smith

Oct. 29 (Bloomberg) -- Oil traded little changed after falling on a report that showed U.S. crude and gasoline inventories expanded last week.

Crude stabilized today before data from the U.S. Commerce Department forecast to show that the world’s largest economy grew in the third quarter for the first time in more than a year. Oil fell the most in a month yesterday after the Energy Department said that U.S. gasoline stockpiles climbed by 1.62 million barrels, more than expected.

“Eighty dollars has proven to be a real stumbling block for crude oil,” said Christopher Bellew, senior broker at Bache Commodities Ltd. in London. “We’re going to need a more definite increase in demand in order to push prices through that level. Currencies, equities and other commodities will be pointers in the meantime.”

Crude oil for December traded up 30 cents at $77.76 barrel in electronic trading on the New York Mercantile Exchange at 9:32 a.m. London time. Yesterday, the contract dropped $2.09, or 2.6 percent, to $77.46, the lowest settlement since Oct. 14. Prices have gained 73 percent this year.

The world’s largest economy expanded at a 3.2 percent annual pace from July through September after shrinking in the previous four quarters, according to the median estimate of 79 economists surveyed by Bloomberg News. The Commerce Department’s report on gross domestic product is due at 8:30 a.m. in Washington.

‘Overdue Correction’

“After several weeks of heady gains in a number of markets, we are finally seeing a long overdue correction set in,” said Edward Meir, senior analyst with MF Global Ltd. in Connecticut. “We may get one more leg lower in commodities, particularly if the U.S. GDP figures surprise to the upside.

“This scenario will surely boost the dollar yet again,” Meir said, “as it will likely convey the message towards tighter money and higher rates may soon begin.”

A stronger U.S. currency often diminishes investors’ demand for dollar-priced assets used to hedge against inflation, such as gold and crude.

Inventories of crude oil rose 778,000 barrels to 339.9 million in the week ended Oct. 23, the Energy Department report showed yesterday. A 1 million-barrel drop was forecast, according to a Bloomberg News survey.

Supplies of distillate fuel, a category that includes heating oil and diesel, declined 2.13 million barrels to 167.8 million. Inventories were 29 percent higher than the five-year average for the week, the department said.

Fuel demand dropped 0.8 percent to an average of 18.5 million barrels a day last week, the report showed. Imports of crude oil increased 2.2 percent to 8.89 million barrels a day last week, the report showed. Fuel imports climbed 6.3 percent to 2.54 million barrels a day.

Brent crude oil for December traded up 38 cents at $76.24 a barrel on the ICE Futures exchange at 9:33 a.m. London time. Prices dropped $2.06, or 2.6 percent, to end the session at $75.86 a barrel yesterday.

To contact the reporter on this story: Grant Smith in London at gsmith52@bloomberg.net

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Yen Trades Near Two-Week High Versus Euro on Economic Concerns

By Yasuhiko Seki and Ron Harui

Oct. 29 (Bloomberg) -- The yen traded near the highest in two weeks against the euro amid signs the global economic recovery is losing steam, damping demand for higher-yielding assets.

The 16-nation currency headed for a fourth day of losses against the yen as Asian stocks sank and before a report forecast to show German unemployment rose in October. The New Zealand dollar was near the lowest level in three weeks after the central bank left the key rate unchanged and signaled it won’t rise until the second half of 2010, damping demand for the nation’s assets.

“As optimism about the global economy wanes, investors will question if any other central bank besides the Reserve Bank of Australia is willing to hike rates,” said Shuzo Kakuta, senior foreign-exchange adviser at Tokyo Tomin Bank Ltd. “Emerging uncertainty about exit strategies may trigger unwinding of carry trades that were used to secure higher yields.”

The yen traded at 133.08 against the euro at 6:07 a.m. in London from 133.43 yesterday in New York. It earlier reached 132.81 yen, the highest level since Oct. 14. The dollar was at $1.4727 per euro from $1.4706 after reaching $1.4683, the strongest level since Oct. 12. The yen fetched 90.37 per dollar from 90.75 in New York.

New Zealand’s dollar was at 71.90 U.S. cents from 72.10 cents. It earlier hit 71.63 cents, the least since Oct. 5. The U.S. dollar reached as high as C$1.0821, the strongest level since Oct. 5.

The Standard & Poor’s 500 Index dropped 2 percent yesterday on concern a rally in equities this year outpaced prospects for economic growth. The MSCI Asia Pacific Index of regional shares fell for a third day, losing 1.3 percent, while Japan’s Nikkei 225 Stock Average slid 1.8 percent, the steepest drop since Oct. 2.

Economic Data

The euro headed for the longest stretch of losses since September against the yen as a Bloomberg survey of economists showed the jobless rate in Germany, Europe’s biggest economy, rose to 8.3 percent in October from 8.2 percent in the previous month. The jobs report is due today.

“Data recently released was far from being completely reassuring, fueling doubts about the sustainability of the recovery,” Sebastien Barbe, head of emerging market research and strategy in Hong Kong at Calyon, wrote in a research note today. “The euro may remain soft versus both the dollar and the yen in the short term, as risk appetite remains capped and investors book profits.”

Goldman Forecast

Goldman Sachs Group Inc. cut its forecast for third-quarter U.S. gross domestic product growth to 2.7 percent from 3 percent. The median forecast in a Bloomberg survey of 79 economists was for growth of 3.2 percent following four-straight quarters of contraction. The Commerce Department’s report on gross domestic report is due at 8:30 a.m. in Washington.

“A sense of wariness is now rife following Goldman’s forecast downgrade,” said Takashi Kudo, director of foreign- exchange sales at NTTSmartTrade Inc., a unit of Nippon Telegraph & Telephone Corp.

New Zealand’s dollar headed for its first monthly drop since February against the dollar on growing uncertainty over interest rates.

“We expect to keep the cash rate at the current level until the second half of 2010,” Governor Alan Bollard said in a statement in Wellington today after keeping the benchmark at a record-low 2.5 percent. “We see no urgency to begin withdrawing monetary policy stimulus.”

Swaps traders expect Bollard to raise rates 2.13 percentage points over the coming year, a Credit Suisse Group AG index shows, compared with bets for 2.35 points on Oct. 27.

‘Dovish Surprise’

“It’s a dovish surprise for the market,” said Imre Speizer, a strategist at Westpac Banking Corp. in Wellington. “The global mood is quite pessimistic from the last six trading sessions. There’s a good chance we will see more downside.”

The New Zealand dollar surged 25 percent against the greenback in the past six months, the biggest gain among the 16 most-traded currencies.

Gains in the yen were tempered amid speculation Japanese investors will purchase overseas assets this week in search of higher returns.

Finance companies in Japan are looking to raise about 1.7 trillion yen ($18.8 billion) for mutual funds focused on foreign assets today and tomorrow, according to data compiled by Bloomberg. Japanese investors bought 304.9 billion yen more in overseas bonds and notes than they sold during the week ended Oct. 24, figures from the Finance Ministry showed in Tokyo today.

Mexican Peso

“Domestic investors are likely to put some of their money into these mutual funds,” said Tsutomu Soma, a bond and currency dealer at Okasan Securities Co. Ltd. in Tokyo. “Rates are very low here, while the performance of emerging and other overseas markets is pretty good.”

The benchmark interest rate is 0.1 percent in Japan, compared with 4.5 percent in Mexico and 3.25 percent in Australia, attracting investors to assets in those nations.

Selling the yen today for the Mexican peso would provide a total return of 9.7 percent by the end of next March, based on Bloomberg calculations using analyst exchange-rate forecasts and the difference between the two nations’ interest rates.

Mexico’s peso fetched 6.80 yen from 6.82 yen yesterday, and Australia’s dollar traded at 81.25 yen from 81.42 yen.

The euro reversed early losses against the dollar amid speculation the Federal Reserve won’t rush to exit from monetary easing policies. Futures and options traders see a 45.5 percent chance that the Fed will maintain its record-low target lending rate at the March meeting, up from a 43.0 percent probability a month ago.

“As the Fed can’t possibly start squeezing liquidity right now, investor incentive to use dollars to secure higher yields will remain fairly strong,” said Shinichi Hayashi, a Tokyo- based dealer at Shinkin Central Bank, the central institution for Japan’s financial cooperatives.

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

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Canada’s Currency Weakens as Equities, Crude Oil Post Losses

By Matt Townsend

Oct. 28 (Bloomberg) -- Canada’s currency depreciated against its U.S. counterpart to the lowest level in more than three weeks as declines in crude oil, the nation’s largest export, and stocks damped demand for higher-yielding assets.

The Canadian dollar, nicknamed the loonie for the image of the aquatic bird on the C$1 coin, fell against 11 of the 16 most-traded currencies tracked by Bloomberg, including the yen, euro and pound. The U.S. dollar rose against 14 of them. Bank of Canada Governor Mark Carney reiterated today during testimony in Parliament that a strong loonie threatens the nation’s economy.

“Risk aversion, Carney, equities and the stronger dollar should keep the Canadian dollar under pressure short term,” said Dean Popplewell, a currency analyst in Toronto at Oanda Corp., an online currency-trading firm. “Fundamentals still support the Canadian dollar, but there are better levels to buy it.”

The Canadian dollar depreciated 1.5 percent to C$1.0811 per U.S. dollar at 5 p.m. in Toronto, from C$1.0647 yesterday. It touched 1.0814, the weakest level since Oct. 5. The currency rallied against the greenback 13 percent this year and fell 1.1 percent this month. One Canadian dollar buys 92.50 U.S. cents.

The loonie extended its decline against the dollar as sales of new U.S. homes unexpectedly fell 3.6 percent in September, raising concern that an economic recovery in Canada’s largest trading partner may be losing momentum and increasing demand for the safety of the U.S. dollar.

Currency Strength

Canadian government bonds rose today, pushing the yield on the two-year note down five basis points, or 0.05 percentage point, to 1.43 percent. The price of the 1.25 percent security due in December 2011 increased 10 cents to C$99.63. The 10-year note yield decreased four basis points.

The Bank of Canada amplified a warning that the loonie’s appreciation threatens the nation’s economic recovery in a statement on Oct. 20 after it left the benchmark interest rate at a record low of 0.25 percent and said it would remain there until mid-2010.

Carney repeated the comment two days later and said intervention to deal with the currency’s strength is “always an option.” Central banks intervene by buying or selling currencies to influence exchange rates.

The central banker reiterated the strength warning yesterday during his first day of testimony to lawmakers and followed with more comments today. He also said there are other “options” to slow the currency’s appreciation, including quantitative easing, when a central bank buys securities to inject new cash into an economy. The loonie has weakened 4.9 percent since Oct. 19.

Resistance Level

The U.S. dollar broke through a so-called resistance level, an area on a chart where sell orders may be clustered, against the Canadian dollar when it climbed above C$1.07, and it now may move to the low C$1.09 area, analysts led by Shaun Osborne, chief currency strategist in Toronto at TD Securities Inc., wrote in a note today.

The TD strategists added that such a weakening of the loonie “looks excessive” and may be pared as the month ends.

The Standard & Poor’s 500 Index fell for a fourth day, tumbling 2 percent. It retreated 0.7 percent last week. The MSCI World Index, a measure of stocks in 23 developed markets, was down for the seventh straight day, also dropping 2 percent.

Crude oil for December delivery slid as much as 3 percent to $77.15 a barrel on the New York Mercantile Exchange, the lowest level since Oct. 16. The Reuters/Jefferies CRB Index of 19 raw materials fell 2 percent. Raw materials account for more than half of Canada’s export revenue.

The loonie will strengthen to C$1.05 per U.S. dollar by year-end, according to the median forecast of 37 economists and analysts in a Bloomberg survey.

To contact the reporter on this story: Matt Townsend in New York at mtownsend9@bloomberg.net

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Gold Gains From Three-Week Low as Stock Fall Spurs Haven Demand

By Kim Kyoungwha

Oct. 29 (Bloomberg) -- Gold rebounded from its lowest level in three weeks after the metal’s decline prompted investors to increase holdings and a drop in equities boosted its appeal as a store of value.

Bullion gained as Asian stocks extended a global drop in equities after new-home sales fell unexpectedly in the U.S., casting doubt over the strength of the recovery there and reviving demand for safer assets. The MSCI Asia Pacific Index of regional shares fell for a third day.

“We did have a fairly strong sell-off overnight,” said Darren Heathcote, head of trading at Investec Bank Ltd. in Sydney. “Probably that’s a short-term bearish move. And, certainly, there’s some safe haven buying.”

Gold for immediate delivery increased 0.4 percent to $1,031.68 at 1:20 p.m. in Singapore after earlier falling to $1,026.60, the lowest since Oct. 6. The precious metal, which fell as much as 1.3 percent yesterday, reached a record $1,070.80 an ounce on Oct. 14.

Stocks fell as the home-sales report reinforced concerns a recovery from the worst recession since the 1930s may cool. An $8,000 tax credit in the U.S. ends in November. Economists say a recovery in housing is a key to rebuilding the confidence and finances of American consumers, whose spending makes up 70 percent of the world’s largest economy.

Among other precious metals, silver rose 0.6 percent to $16.24 an ounce, platinum added 0.5 percent to $1,315.50 an ounce and palladium jumped 0.6 percent to $318 an ounce.

To contact the reporter on this story: Kyoungwha Kim in Singapore at Kkim19@bloomberg.net

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Copper Drops Most in a Month in Shanghai on China Loan Rules

By Glenys Sim

Oct. 29 (Bloomberg) -- Copper fell the most in a month in Shanghai, tracking an overnight drop in London and New York, after the Chinese government said it plans to tighten rules on personal loans.

Copper and zinc declined after the China Banking Regulatory Commission announced yesterday a draft rule aimed at ensuring loans enter the real economy instead of being used for speculation. The measure was announced after the close of trade.

“The market managed to rally in the middle of a slowdown thanks to the availability of credit,” said Lu Wei, an analyst at Jiangsu Holly Futures Brokerage Co. “People who have no business buying copper were said to be making purchases and driving prices higher and this may all come to an end soon.”

January-delivery copper on the Shanghai Futures Exchange fell as much as 2.7 percent to 49,900 yuan ($7,306) a metric ton, the biggest intraday drop since Sept. 28 and the lowest price for a most-active contact since Oct. 21. Zinc futures lost as much as 2.9 percent, the most since Sept. 14, and ended the day down 2.7 percent at 16,465 yuan a ton.

Copper for delivery in three months on the London Metal Exchange was little changed at $6,432 a ton after dropping 2.3 percent yesterday, the largest decline in almost a month. Copper prices have more than doubled this year as China’s $586 billion stimulus package and record lending spurred raw material purchases.

“We’re seeing risk being pulled from all markets, not just metals,” said Lu.

A report yesterday showed U.S. new home sales unexpectedly fell 3.6 percent in September. Builders are the biggest copper users in the U.S., where government tax credits for first-time home buyers will end next month. The U.S. and China are the two largest consumers of the metal used in construction and automobiles.

Among other LME-traded metals, aluminum and lead were little changed at $1,908.50 a ton and $2,232 a ton respectively. Zinc fell 0.5 percent to $2,178.75 a ton, nickel declined 0.4 percent to $17,730 a ton, and tin slipped 0.3 percent to $14,600 a ton.

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

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Wheat Gains as Decline to Two-Week Low May Increase Demand

By Jae Hur

Oct. 29 (Bloomberg) -- Wheat advanced for the first time in five days on speculation that the price drop to a two-week low may increase demand from overseas importers.

Wheat futures lost 10.3 percent in the previous four days as forecasts for drier weather in the eastern Midwest helped accelerate U.S. planting delayed by rains. The Dollar Index was little changed after gaining for a fifth day against six major currencies, boosting appeal of commodities as an alternative investment.

“It’s a short-term rally after sharp drops,” said Toshimitsu Kawanabe, an analyst at Tokyo-based commodity broker Central Shoji Co. Commodities had been under pressure since late last week as the dollar index rallied after touching the lowest level since August last year, he said.

Wheat for December delivery rose 0.6 percent to $4.975 a bushel in electronic trading on the Chicago Board of Trade at 4:02 p.m. Tokyo time. The grain touched $4.9125 yesterday, the lowest level since Oct. 13 and is poised for the first weekly drop in four.

About 76 percent of the winter-wheat crop was sown as of Oct. 25, behind the five-year average of 85 percent, the U.S. Department of Agriculture estimates.

The Dollar Index was at 76.436 as of 4:04 p.m. Tokyo time, compared with yesterday’s last trade of 76.467. The index fell to 74.940 on Oct. 21, the lowest level in more than a year. A drop in the dollar makes U.S. grain supplies cheaper for holders of other currencies.

Warm Weather

Corn for December delivery was little changed at $3.6925 a bushel. The grain touched $4.135 on Oct. 23, the highest price for a most-active contract since June 22.

Soybeans for January delivery earlier fell as much as 0.5 percent to $9.6525 a bushel before trading at $9.7225 a bushel. The most-active contract reached $10.2925 on Oct. 23, the highest price since Aug. 14.

Corn and oilseed fell yesterday on speculation that warmer, drier weather will allow U.S. farmers to speed up rain-delayed harvests.

About 20 percent of the corn crop was collected as of Oct. 25, compared with 58 percent, the average for same time of the season in the previous five years, the USDA said this week. The soybean harvest was 44 percent done, versus the previous five- year average of 80 percent.

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

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Nippon Steel Reports Smaller Loss as Asian Demand Increases

By Masumi Suga and Yasumasa Song

Oct. 29 (Bloomberg) -- Nippon Steel Corp., the world’s second-largest steelmaker, reported its smallest loss in three quarters, aided by economic stimulus spending in Asia, and raised its forecast for full-year operating profit.

The net loss narrowed to 29.6 billion yen ($328 million) for the three months ended Sept. 30 from 42.2 billion yen in the previous quarter, the Tokyo-based company said today in a statement. Net income was 78.9 billion in the year-earlier period. The company raised its full-year operating profit forecast to 40 billion, compared with a July break-even outlook.

Stimulus spending in China and emerging Asian nations spurred exports of the metal from Japan and government incentives for fuel-efficient vehicles boosted domestic demand from carmakers. The global steel market has bottomed out and will grow by 9.2 percent next year, the World Steel Association said Oct. 12.

“Recently, volumes and prices have been volatile and the key is whether we will be able to produce flexibly to respond to the changing environment,” Shinichi Taniguchi, executive vice president of Nippon Steel, told reporters today. The company had revised the operating profit forecast after reviewing demand, he said at a briefing.

Nippon Steel shares, which have gained 17 percent this year, fell 0.3 percent to close at 338 yen on the Tokyo Stock Exchange. The Nikkei 225 Stock Average declined 1.8 percent.

Sales were 828.3 billion yen in the second quarter down 41 percent from a year earlier and up 11 percent from the first quarter, according to company data.

Production Forecast

Production was forecast to rise to 15 million metric tons in the second half, compared with 11.5 million tons in the first six months, Nippon Steel said.

ArcelorMittal, the world’s biggest steelmaker, yesterday reported net income of $903 million in the July-to-September period, its first quarterly profit in a year, boosted by a tax gain. The company had “seen the first signs of recovery” in the quarter, Chief Executive Officer Lakshmi Mittal said in a statement.

Japanese steel exports increased 3.4 percent to 3.41 million metric tons in August, compared with a year earlier, the first year-on-year gain in 11 months, the Japan Iron & Steel Federation said Oct. 1.

Tokyo-based JFE Holdings Inc., Nippon Steel’s closest domestic rival, posted a profit of 12.8 billion yen last quarter, aided by shipments to Asia, the company said Oct. 26.

Nippon Steel failed to fully benefit from an improving regional economy as a coke leakage from a furnace in August reduced output at its Kimitsu factory, near Tokyo.

The company forecast the furnace problem at the Kimitsu mill will reduce its pre-tax profit from operations by 19 billion yen this fiscal year.

Sumitomo Metal Industries Ltd., Japan’s third-largest steelmaker, today widened its full-year net loss forecast to 50 billion yen from a previous outlook for a 45 billion yen loss because of weaker-than-expected demand for seamless pipes.

To contact the reporters on this story: Masumi Suga in Tokyo at msuga@bloomberg.net; Yasumasa Song in Tokyo at ysong9@bloomberg.net.

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Japan’s Nikkei 225 Falls Most in Four Weeks on Earnings, Yen

By Akiko Ikeda and Patrick Rial

Oct. 29 (Bloomberg) -- Japanese stocks fell, dragging the Nikkei 225 Stock Average to its steepest decline in four weeks as corporate losses and falling commodity prices raised concern the global recovery is faltering.

Advantest Corp. slumped 6.6 percent, after the world’s biggest maker of memory-chip testers posted a wider loss as orders slumped. Hino Motors Ltd., Japan’s biggest maker of heavy-duty trucks, tumbled 8.7 percent after reporting a first- half loss. Cosmo Oil Co. plunged 3.3 percent as crude prices declined. Stocks also fell as the yen strengthened to its highest level in a week.

“The market was hoping for major forecast upgrades that just aren’t coming through as companies are clearly nervous about the second half,” said Naoki Fujiwara, chief fund manager at Tokyo-based Shinkin Asset Management Co., which oversees the equivalent of $4 billion. “It’s probably better to delay buying because stocks are likely headed lower.”

The Nikkei 225 fell 1.8 percent to 9,891.10, at the market close in Tokyo. It was the sharpest slide since Oct. 2. The broader Topix index dropped 0.7 percent to 882.26, with about three stocks falling for each that gained. Stocks in the benchmark are valued at 37 times estimated earnings, compared with 20 at the start of 2009.

Crude oil for December delivery lost 2.6 percent to $77.46 a barrel in New York yesterday. The London Metals Index, a measure of six metals including copper and zinc, slipped 3.2 percent yesterday.

The yen appreciated to 90.38 against the dollar, its strongest level since Oct. 20. Against the euro, Japan’s currency strengthened to 133.12 from 135.27. The stronger yen reduces income when overseas revenue is converted into the local currency.

To contact the reporters for this story: Akiko Ikeda in Tokyo at iakiko@bloomberg.net; Patrick Rial in Tokyo at prial@bloomberg.net.

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Asian Stocks Fall on Growth Concerns; PetroChina, ICBC Slump

By Jonathan Burgos and Ian Sayson

Oct. 29 (Bloomberg) -- Asian stocks fell, extending a global sell-off, as companies from PetroChina Co. to Australia & New Zealand Banking Group Ltd. posted lower-than-estimated profit and China moved to tighten lending rules. The yen rose.

PetroChina, the nation’s biggest oil producer, slumped 4 percent in Hong Kong. Advantest Corp., the world’s No. 1 maker of memory-chip testers, slid 6.6 percent after posting a wider loss on slumping orders. ANZ Banking dropped 2.1 percent in Sydney as its chief executive officer said the Australian economy is “still fragile.” Industrial & Commercial Bank of China Ltd. sank 2.7 percent on government plans to tighten rules on personal loans.

The MSCI Asia Pacific Index slipped 1.4 percent to 114.79 as of 5:18 p.m. in Tokyo, extending a two-day, 2.9 percent decline. The gauge has climbed 62 percent from a more than five- year low on March 9 amid signs the global economy is recovering from its worst slowdown since World War II. The MSCI World Index lost 0.3 percent, after slumping 2 percent yesterday.

“Investors are wise to take some of their money off the table,” said Jonathan Ravelas, strategist at Manila-based Banco de Oro Unibank Inc., which has about $8 billion of assets. “There is a lingering doubt in the market if the corporate earnings we are seeing are being driven by actual demand or is it all because of government stimulus spending.”

Japan’s Nikkei 225 Stock Average sank 1.8 percent. China’s Shanghai Composite Index and Hong Kong’s Hang Seng Index both dropped 2.3 percent. Australia’s S&P/ASX 200 Index declined 2.4 percent as BHP Billiton Ltd., the world’s largest mining company, slid 3.3 percent after commodity prices declined.

New Home Sales

South Korea’s Kospi Index declined 1.5 percent. Hyundai Steel Co. tumbled 5.8 percent after cutting product prices. New Zealand’s NZX 50 Index dipped 0.2 percent as the nation’s central bank said it will wait until the second half of next year before raising interest rates.

Futures on the Standard & Poor’s 500 Index rose 0.4 percent. The gauge fell 2 percent in New York yesterday, the most in a month, as the Commerce Department said sales of new homes fell 3.6 percent to a level that was lower than the most pessimistic economist’s forecast.

Concern the global economic recovery is faltering damped demand for higher-yielding assets. The yen earlier climbed to 132.81 against the euro, its highest since Oct. 14. Japan’s currency was recently at 133.58 per euro from 133.43 yesterday in New York. Treasuries were little changed, with yields near the lowest in a week.

Worse Than Estimated

In Hong Kong, PetroChina dropped 4 percent to HK$9.55. The company posted a 24 percent drop in third-quarter profit to 30.8 billion yuan ($4.5 billion) as oil prices slumped from a record. The median estimate of five analysts surveyed by Bloomberg was for a profit of 35 billion yuan.

In Tokyo, Advantest slumped 6.6 percent to 2,065 yen after its second-quarter net loss widened to 3.3 billion yen ($36 million) from 2.8 billion yen a year earlier. NEC Electronics Corp. tumbled 8.3 percent to 688 yen after widening its full- year loss forecast.

The MSCI World Index tumbled 42 percent last year and the MSCI Asia Pacific Index slumped by a record 43 percent as the global credit crunch dragged economies worldwide into recession. The financial crisis isn’t over, Harvard University professors Kenneth Rogoff and Niall Ferguson said.

The Reserve Bank of Australia this month became the first central bank among Group of 20 nations to raise interest rates amid signs of strength in the country’s economy. New Zealand’s central bank maintained the official cash rate at a record-low of 2.5 percent because the economy needs further stimulus as it recovers from a recession.

Rising Interest Rates

Australia’s central bank should have waited longer before raising borrowing costs because the economy is “still fragile,” ANZ Bank Chief Executive Officer Mike Smith told reporters in Sydney today.

The lender, Australia’s second-biggest provider of business loans, dropped 2.1 percent to A$22.85. Full-year net income fell 11 percent to A$2.94 billion ($2.6 billion), short of the A$3.13 billion analysts in a Bloomberg survey anticipated.

Bank of Communications Ltd., China’s fourth-largest lender by market value, declined 5.4 percent to HK$9.65. The company said third-quarter net income rose 1.5 percent to 7.32 billion yuan ($1.07 billion), missing the 7.45 billion yuan average estimate of eight analysts surveyed by Bloomberg.

Industrial & Commercial Bank, the world’s largest bank by market value, fell 2.7 percent to HK$6.08. Bank of China Ltd. retreated 1.7 percent to 3.97 yuan in Shanghai.

Personal Lending

Chinese banks also fell on the proposed rule changes to personal lending, which the China Banking Regulatory Commission said are aimed at ensuring loans enter the real economy. Advances exceeding 300,000 yuan ($43,937) will be given directly to the borrower’s counterparty, rather than the borrower, according to a draft rule.

“What we might be seeing is just some signaling, as we’re seeing elsewhere, that they might have to take away some of that stimulus in the private sector just to keep things on an even keel,” Simon Godfrey, a senior investment specialist at Fortis Investment Management, said in a Bloomberg Television interview from Hong Kong. “There could be some negative reaction here.”

In Taiwan, Farglory Land Development Co., decreased 5.1 percent to NT$68.90 after the United Daily newspaper said the central bank asked the island’s state-owned lenders to curb loans used for property investment.

Global Stock Rally

Better-than-estimated earnings and economic reports have driven the global stock rally since March. Companies in the MSCI Asia Pacific Index are valued at 22 times estimated earnings, compared with 17 times for the S&P 500 and 15 times for Europe’s Dow Jones Stoxx 600 Index.

The rally has failed to convince investors and analysts that it’s time to take on more risk. Almost 40 percent of the respondents to a poll of investors and analysts who are Bloomberg subscribers say they are still hunkering down. U.S. investors are even more cautious, with more than 50 percent saying they are in a defensive stance.

“The market was hoping for some major forecast upgrades that just aren’t coming through as companies are clearly nervous about the second half,” said Naoki Fujiwara, chief fund manager at Tokyo-based Shinkin Asset Management Co., which oversees the equivalent of $4 billion. “It’s probably better to wait on buying as stocks are likely headed a bit lower.”

Oil, Metals Slump

Resources companies declined after crude oil for December delivery tumbled 2.6 percent, the most in a month, to $77.46 a barrel in New York yesterday, while the London Metals Index, a measure of six metals, slumped 3.2 percent.

BHP dropped 3.3 percent to A$37.13. Rio Tinto Ltd., the world’s second-biggest mining company, slipped 4.9 percent to A$60.98. Woodside Petroleum Ltd., Australia’s No. 2 oil producer, dropped 3.5 percent to A$46.69. Inpex Corp., Japan’s largest oil explorer, fell 3.1 percent to 746,000 yen. Cnooc Ltd., China’s biggest offshore oil producer, declined 4.5 percent to HK$11.50.

Nippon Mining Holdings Inc. sank 3.4 percent to 394 yen. Japan’s biggest copper producer and an oil refiner said in a preliminary earnings statement first-half net income was 18.8 billion yen, missing its projection by 18 percent amid narrower margins for petroleum products.

Hyundai Steel, South Korea’s second-largest steelmaker, slumped 5.8 percent to 77,100 won. The company lowered the price of some products for the first time this year after the cost of steel scrap and competing imports declined.

To contact the reporters for this story: Jonathan Burgos in Singapore at jburgos4@bloomberg.net; Ian C. Sayson in Manila at isayson@bloomberg.net.

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German Property Funds Shop in U.K., Paris as Money Flows Back

By Simon Packard

Oct. 29 (Bloomberg) -- Matthias Danne, head of Germany’s largest real estate mutual-fund company, is ready to return to the commercial property market and make purchases in France, Germany and the U.K. after prices dropped as much as 45 percent.

“For the first time in five or six years, we can buy Class A properties in prime locations,” the DekaBank Deutsche Girozentrale management board member said in an interview at the Expo Real trade fair in Munich, which takes place in October each year following the Oktoberfest beer festival. “Two years ago, it was too expensive.”

Deka, Commerz Real AG and Union Investment Real Estate GmbH are leading a revival in acquisitions in Europe by German property funds as the 87.3 billion-euro ($131 billion) industry recovers from its second crisis in five years. Investors fled these funds after Lehman Brothers Holdings Inc.’s bankruptcy in September 2008, which forced 12 to close and most to shelve purchase plans.

German money managers now have as much as 7.5 billion euros to spend, according to estimates from CB Richard Ellis Group Inc., the largest commercial broker.

German funds made 1.05 billion euros of purchases in Europe in the third quarter, 22 percent more than in the first half, Los Angeles-based CB Richard Ellis estimates. They accounted for about 6 percent of all commercial property deals in Europe, up from 3.5 percent in the first half and an average of 4.6 percent a year from 2004 to 2008.

“The German open-ended funds are going strong and, if anything, their activity is increasing,” said Iryna Pylypchuk, a London-based researcher at CB Richard Ellis.

2008 Exodus

The exodus in 2008 was intensified by a government pledge to guarantee savings-account deposits, a state bailout of Munich-based Hypo Real Estate AG and withdrawals by other money managers facing their own redemptions.

Last year was only the second time in half a century that German funds were shut for redemptions. Three closed in December 2005 and January 2006 after probes by Germany’s financial regulator and a Frankfurt prosecutor raised concern that property valuations had been inflated and led to the eventual withdrawal of 11.6 billion euros from all of the funds.

Funds were just starting to attract money again and to resume acquisitions in 2008, notably in London, when they became engulfed by the global financial turmoil. Four have yet to open for redemptions again while they sell assets, increase debt or seek fresh investment.

Getting Some Back

In the first eight months of 2009, German funds got back about half the money investors withdrew in the seven weeks following Lehman’s collapse, or a net 3.04 billion euros, figures compiled by Frankfurt-based BVI Bundesverband Investment & Asset Management show. Last year, they made 8.5 billion euros of property purchases, though most stopped investing in the final months of 2008.

Savers are coming back to real estate mutual funds as they outperform other investments, asset managers say. They returned 3 percent in the year through August, BVI data show. Bank savings accounts currently yield an average of about 1 percent.

The German funds mostly target buildings occupied by tenants on long, inflation-indexed leases. They delivered an average annual return of 5.2 percent for investors during the past 20 years, BVI says.

“We call real estate concrete gold,” said Michael Birnbaum, head of communications at property fund manager KanAm Grund KAG. It reopened one of its two funds in July. They had redemptions totaling 471 million euros by the end of August. Earlier this month, Grundinvest Fonds registered daily inflows of at least 2 million euros.

Big Three

The three largest operators are drawing most of the inflows and account for about 90 percent of the property acquisitions by German funds. Deka, Commerz Real and Union Investment funds, which didn’t close, attracted a net 4.66 billion euros in January through August, according to BVI, while the remaining 35 had net outflows of 1.62 billion euros.

The sales clout of their parent companies helped the Big Three, asset managers say. Deka is owned by regional savings banks and Union Investment by cooperative banks. Commerz Real is part of Frankfurt-based Commerzbank AG, which has 800 branches.

“We have sorted out most of the problems; we’re almost back to where we were” before the crisis, said Barbara Knoflach, chief executive officer of Frankfurt-based SEB Asset Management AG. She spoke over coffee and cake at SEB’s booth at the real estate trade fair, where attendance dropped about 15 percent this year to 21,000 people.

Notice Periods

SEB’s ImmoInvest fund opened for redemptions again in May. Knoflach, who is also a member of BVI’s board, said the lobby is pressing for law changes next year that would end daily fund redemption rights for institutional investors and impose notice periods of about 12 months.

The two crises have left some investors wary of property mutual funds, said Tilman Hickl, managing director of Munich- based UBS Real Estate KAG, a unit of UBS AG. It has yet to reopen one of its two funds for withdrawals.

“The perception that the funds are a 100 percent safe haven has been partly demolished,” Hickl said. “If two or three funds have to close again, that might cause a panic.”

Hans-Joachim Kuehl, Commerz Real’s head of acquisitions, was forced to halt 800 million euros of property deals he was negotiating to weather the liquidity crisis. His 2009 budget for making investments was cut in half to 1 billion euros.

“In February, we decided ‘Let’s get back into the investment market,’” Kuehl said. “Fresh money was coming in and the forecast was quite positive” for certain markets.

Paris Slump

Since August, he’s agreed to buy or acquired three office buildings in Paris for 222 million euros. Hamburg-based Union Investment also agreed to buy a building in Paris last month for 177 million euros. Values in the city have dropped as much as 40 percent since the peak 21 months ago.

The funds are also looking outside Europe, which accounts for about 85 percent of their investments. Deka bought 1999 K Street in Washington last month for $208 million and spent 150 million euros in June on two Australian properties.

Total European commercial real estate investment totaled 42 billion euros in the first nine months, or 57 percent less than a year earlier, CB Richard Ellis estimates, reflecting the difficulties most buyers have in obtaining debt finance.

“There aren’t that many investors willing or able to spend money on big investments of over 100 million euros,” said Reinhard Kutscher, chairman of the management board of Union Investment Real Estate. He expects Union to sign as much as 700 million euros of deals by year-end on top of the 1 billion euros of purchases already made.

Dusting Off

Even those that lost the most from their funds in absolute terms are dusting off acquisition plans.

Credit Suisse Group AG’s three funds registered combined outflows of 680.5 million euros in the first eight months. From Sept. 1 to Oct. 15, its CS Euroreal fund for individual investors had more than 100 million euros of net inflows, said Dirk Meiwirth, head of real estate product management at Credit Suisse Asset Management Immobilien KAG in Frankfurt.

“We are looking strategically at different deals for the funds,” he said.

If the current pattern continues, German funds may have as much as 12 billion euros to invest through 2011, CB Richard Ellis estimates.

In London, the best deals may already be in the past, Danne said. So far this year, Deka funds have bought only a supermarket logistics warehouse in north London for about 73 million euros after getting outbid on other sales in the British capital.

“We are close to the bottom in a couple of markets,” Danne said. “Maybe it’s a bit late to be in the U.K. -- this year we failed in a couple of deals in London, due to returning demand.”

To contact the reporter on this story: Simon Packard in London at packard@bloomberg.net

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Akamai, First Solar, LSI, Symantec, XL: U.S. Equity Preview

By Lu Wang

Oct. 29 (Bloomberg) -- Shares of the following companies may have unusual moves in U.S. trading. Stock symbols are in parentheses.

Akamai Technologies Inc. (AKAM US): The provider of software that makes Web sites load faster said it expects sales of at least $217 million in the fourth quarter. That exceeded the average estimate of $212.1 million from analysts in a Bloomberg survey.

First Solar Inc. (FSLR US): The world’s largest maker of thin-film solar power modules reported sales of $480.9 million in the third quarter, trailing the average analyst estimate by 9.3 percent, according to Bloomberg data.

Flowserve Corp. (FLS US): The maker of pumps and valves reduced the high end of its 2009 profit forecast, predicting $7.50 a share at most. The company had previously expected as much as $7.75.

LSI Corp. (LSI US): The computer-chip maker said that, excluding some items, it expects to earn at least 7 cents a share in the fourth quarter. That beat the 6-cent average estimate from analysts in a Bloomberg survey.

Symantec Corp. (SYMC US): The biggest maker of security software reported second-quarter profit that topped analysts’ estimates after winning back customers from competitors and adding new business users.

XL Capital Ltd. (XL US): The Bermuda-based business insurer posted profit excluding some items of 89 cents a share in the third quarter, beating the 63-cent average estimate of analysts surveyed by Bloomberg.

To contact the reporter on this story: Lu Wang in New York at lwang8@bloomberg.net

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Bovespa to Hover at 60,000 After Correction, BNY Mellon Says

By Paulo Winterstein

Oct. 29 (Bloomberg) -- Brazil’s Bovespa stock index probably will hover around 60,000 through Dec. 31 after a correction halted the gauge’s biggest advance in 15 years, according to BNY Mellon ARX Investimentos.

The Bovespa slid 4.8 percent yesterday to 60,162.31, extending a retreat from last week’s 12-month peak to 11 percent, beyond the 10 percent threshold that defines a so- called correction.

Brazilian stocks’ plunge in the past seven days, the most among the world’s 30 biggest markets, came after the government imposed a 2 percent tax on international purchases of stocks and fixed-income assets to stem a gain in the currency. The measure had jumped 79 percent this year through Oct. 19, the best performance as of that date since 1994, on signs Latin America’s largest economy is recovering faster than most nations.

“We have two months until the end of the year and a good part of positive news about an economic recovery and a better year in 2010 has already been priced in,” said Rogerio Poppe, who helps manage 9 billion reais ($5.1 billion) in assets at BNY Mellon in Rio de Janeiro. “This level of 60,000 is reasonable until expectations for improvement are corroborated.”

The so-called IOF tax contributed to the drop as a sign to foreign investors that “you’re not welcome here,” said Paulo Possas, chief executive officer of Eagle Capital in Sao Paulo.

“The IOF was deadly for the bourse,” Possas, who helps manage $60 million, said in a phone interview yesterday. “Someone that may have entered Brazil after a drop produced good prices now probably won’t come back to the market.”

Valuations

International investors helped fuel the Bovespa’s rally this year on speculation record low interest rates, rebounding consumer demand and rallying commodity prices will fuel economic growth. The surge sent the index to 25.4 times the reported profit its companies last month, the highest in at least five years. It trades now for 24.9 times earnings.

“We’re living in a world with a lot of uncertainty and some industries are already trading at levels above pre-crisis multiples,” said Roni Lacerda, who helps manage 2.4 billion reais at Mercatto Gestao de Recursos in Rio de Janeiro.

Estimated profit growth for next year is already reflected in Brazilian stock prices and investors are looking for signs of when central banks will begin raising interest rates to curb inflation, Poppe said.

Stimulus Plans

The MSCI Emerging Markets Index capped its biggest three- day slide in four months yesterday amid concern that central banks may rein in stimulus spending that has helped spur a recovery from the global recession. China’s Banking Regulatory Commission said yesterday that it plans to tighten rules for personal loans, while India began taking steps this week to withdraw its record monetary stimulus.

A rise in U.S. interest rates could lead investors to abandon so-called carry trades that are creating a “huge” asset bubble, New York University professor Nouriel Roubini said this week. In a carry trade, investors borrow in countries with low interest rates to invest in higher-yielding assets.

The Bovespa may decline to as low as 58,000 points, or a 14 percent drop from the Oct. 19 high, after which it may bounce back to end the year above 60,000, according to Gyorgy Pavetits, a fund manager at Foco Asset Management Ltda.

“With this decline to below 61,000 you start to have some stocks that look attractive, like some of these stocks with less liquidity that have fallen more than 20 percent from recent highs,” he said.

Brazilian stocks have more room to fall in the “short term,” said James O’Leary, portfolio manager for the Touchstone International Growth Fund, part of Reno, Nevada-based Navellier & Associates, which manages $3 billion. He owns Petroleo Brasileiro SA, the state-controlled oil company, and Vale SA, the world’s biggest iron ore producer.

“These giant gains can’t continue forever,” he said. “This is a reminder that Brazil is still just an emerging market.”

To contact the reporter on this story: Paulo Winterstein in Sao Paulo at pwinterstein@bloomberg.net.

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Wakeup Call: Risk Could Be Back Today On Better Than Expected Durable Goods

Daily Forex Fundamentals | Written by Saxo Bank | Oct 28 09 09:03 GMT |

Buy on dips with a tight stop in equities. We believe that Durable Goods Order could surprise significantly to the upside today and the sentiment for tomorrow's GDP is quite positive Calendar Economic Data Releases Country Name Time (GMT) Expectation Prior Comment US 12:30 Durable Goods Orders MoM (SEP) 1.0% -2.6% US 12:30 Durable G.O. ex. Transp. MoM (SEP) 0.7% -0.3% US 14:00 New Home Sales MoM (SEP) 2.6% 0.7% Earnings Data Releases Country Name Time (GMT) Expectation Prior Comment US Bf-Mkt Coca Cola 0.462 US 16:30 Conoco Phillips 0.939 What's going on? US figures yesterday were quite disappointing. Especially Consumer Confidence at 47.7 vs. 53.5 expected. S&P500 wedge levels today: 1111 and 1055. We are close to support. Buy on dips with a tight stop. We believe that Durable Goods Order could surprise significantly to the upside today and the sentiment for tomorrow's GDP is quite positive. The USD is again under pressure and commodities were picked up yesterday. One worry: Treasuries and VIX both a lot higher in the past two days. FX FX Daily stance Comment EURUSD 0/- Still look to sell rallies. 1.4830-50 immediate res lvl, target 1.4775 then 1.4700. Stop abv 1.4925. USDJPY 0 Initial suppt at 91.0, below sees 90.70-80 but seen holding for rebound back to 91.50. EURJPY 0/- Bearish developments. May find n/term suppt at 134.85 lvl but sell rallies to 135.75-85 for 134.65. GBPUSD 0/- Sell rallies to 1.6380-90 for break through 1.6335 to target 1.6250. Stop abv 1.6425. AUDUSD 0/- Break below 0.9125 suggests further weakness. Res now 0.9130, max 0.9175 before lower. Tgt 0.90. Equities Equities Daily stance Comment DAX 0/- Buy on dips towards 5590 and target 5650. Stop below 5570. FTSE100 0/+ Buy on dips towards 5173 and target 5222. Stop below 5155. S&P500 0/+ Buy on dips towards 1056 and target 1065. Stop below 1052. Nasdaq100 0/+ DJIA 0/+ Futures Commodities Daily Stance Comment Gold 0/+ Buy at the break of 1044 and target 1055. Stop below 1039. Silver 0/+ Buy on dips towards 16.55 and target 16.75. Stop below 16.40. Crude Oil 0/+ Buy on dips towards 78.50 and target 81. Stop below 77.50. FX Options FX-Options Comment USDJPY Vols went bid yesterday duo to heard behavior when EURUSD vol went bid. Mkt very keen on buying 91.90 expiring today, so we believe that level to act as a magnet on the ccy today. EURUSD Still decent talk abt the 1.49 strike expiring today. Likely to see EURUSD advance to that level for NY expiry before heading lower again. Saxo Bank 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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