U.K. House-Price Gauge Rises to Near 3-Year High, RICS Says

By Svenja O’Donnell

Nov. 10 (Bloomberg) -- A gauge of U.K. house prices rose to the highest level in almost three years in October, led by London, as a shortage of homes for sale intensified, an industry report showed.

The number of real-estate agents saying prices rose exceeded those reporting declines by 34 percentage points, up from 21 points in September and the most since December 2006, the Royal Institution of Chartered Surveyors said in its monthly survey today. A separate British Retail Consortium survey showed stores posted their best October sales growth since 2002.

“There is a lot of evidence to suggest that there is a fair degree of momentum in the market,” Simon Rubinsohn, chief economist at London-based RICS, said in an interview with Bloomberg Television. “The context of all of this is still going to be a general shortage of desirable property.”

Buyers are returning to the housing market after values fell as much as a fifth from their peak in 2007. Bank of England policy makers last week slowed the pace of bond purchases amid signs that rising property and stock markets are helping the economy shake off its worst recession in at least three decades.

The sales-to-stock ratio, a measure of slack in the housing market, rose to 30 from 29 in September, the report showed. Average sales per surveyor over the last three months climbed to 19 from 18.5.

The upturn in house prices was led by the U.K. capital, where the net balance of surveyors saying prices rose jumped to 95 points, the most since December 1996, RICS said.

Limited Supply

“We are continuing to see an increase in demand from potential purchasers and with only a limited supply of properties coming onto the market, prices are continuing to rise,” said James Perris at De Villiers Surveyors in central London.

Services, manufacturing and house prices are showing signs of recovery as consumer confidence grows. Mortgage approvals climbed to their highest level for 18 months in September, and data from Lloyds Banking Group Plc’s Halifax division showed home values rose twice as much as forecast in October.

Sales at U.K. stores open at least a year rose 3.8 percent in October from a year earlier, the BRC said today. Sales dropped 2.2 percent in October 2008 after the collapse of Lehman Brothers Holdings Inc. sent consumer confidence tumbling.

Rising unemployment may yet weigh down on spending and home values. London-based broker Savills Plc said on Nov. 6 that house prices probably will fall as much as 6.6 percent next year, reversing an estimated 3.7 percent gain in 2009.

To contact the reporter on this story: Svenja O’Donnell in London at sodonnell@bloomberg.net.

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Malaysian Production Declines Least in 11 Months Amid Recovery

By Stephanie Phang and Michael J. Munoz

Nov. 10 (Bloomberg) -- Malaysia’s industrial production fell the least in 11 months in September as improving local and overseas demand revived orders for manufactured goods.

Production at factories, utilities and mines dropped 6 percent from a year earlier, after decreasing a revised 7 percent in August, the Putrajaya-based Statistics Department said today. That compares with the median estimate for a 3.8 percent decline in a Bloomberg News survey of 17 economists.

Malaysia raised its 2009 economic forecast last month, joining Asian neighbors including Singapore and Thailand in saying this year’s slump is easing more than expected as the world recovers from recession. Prime Minister Najib Razak said last week the outlook for growth in the third quarter has “brightened.”

“As private consumption recovers in developed economies and emerging markets, shipments from Malaysia are going to rise and thus support production,” said Rahul Bajoria, an economist at Barclays Capital in Singapore.

Exports of Malaysian Pacific Industries Bhd. semiconductors and other goods fell 24.2 percent in September, easing from a 29.7 percent slump in May, after policy makers around the world cut interest rates and poured about $2 trillion of stimulus into the global economy to revive growth.

Worldwide semiconductor sales rose 8.2 percent in September from August, according to the San Jose, California-based Semiconductor Industry Association.

Najib said Oct. 23 that Malaysia’s $195 billion economy may shrink 3 percent this year, less than an earlier forecast for a contraction of 4 percent to 5 percent. The government expects gross domestic product to expand as much as 3 percent in 2010.

Malaysia’s manufacturing output fell 7.9 percent in September, after a 7.7 percent decline the previous month that was the smallest drop since October 2008.

Mining slid 3 percent, while electricity production gained 1.8 percent, climbing for a fourth month. Overall industrial production contracted 10.8 percent in the first nine months of the year.

To contact the reporter on this story: Stephanie Phang in Singapore at sphang@bloomberg.net

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China to Overlook Call for Yuan Gain, Researchers Say

By Bloomberg News

Nov. 10 (Bloomberg) -- China, rejecting calls from Europe and Japan, will keep the yuan from gaining against the dollar until exports revive, state researchers said.

Policy makers are unlikely to allow the currency to resume its appreciation this year after keeping it almost unchanged since July 2008, Beijing-based Zhu Baoliang, the chief economist at the State Information Center, said in an interview yesterday. China will stick with its “tough stance” on the currency, Zhang Ming, a researcher at the Chinese Academy of Social Sciences, said in a separate interview.

European Central Bank President Jean-Claude Trichet and Japanese Vice Finance Minister Yoshihiko Noda called last week for the yuan to strengthen. The U.S. Treasury Department said last month that a “lack of flexibility” in China’s exchange- rate and a buildup of foreign-exchange reserves “risk unwinding some of the progress made in reducing imbalances.”

“Foreign pressure won’t push the government to resume appreciation,” Zhu said from the State Information Center, an affiliate of the National Development and Reform Commission, China’s top economic planning agency. “There is no domestic pressure for the yuan to appreciate because exports are still having a year-on-year decline.”

Central bank Governor Zhou Xiaochuan responded to European and Japanese calls for a stronger yuan on Nov. 6, saying that global pressure on appreciation “is not that big.” World Bank Chief Economist Justin Lin said in a lecture at the University of Hong Kong yesterday that China shouldn’t be forced to let its currency appreciate because it may slow a global recovery, the Wall Street Journal reported.

President Barack Obama said in an interview with Reuters yesterday he will bring up currency issues when he visits Beijing next week. China’s policy will be “proactive, controllable and gradual,” Foreign Ministry spokesman Qin Gang said at a regular briefing today. He added that the government needs “to increase the flexibility” of the exchange rate.

Stable Yuan

China, the third-largest economy, has kept its currency at about 6.83 per dollar since July 2008, after a 21 percent gain the previous three years. As the dollar weakened against the euro and yen, the yuan slid 11 percent against the European currency and 10 percent against Japan’s in the past six months.

The yuan closed at 6.8268 per dollar in Shanghai, according to the China Foreign Exchange Trade System. Twelve-month non- deliverable forwards for the yuan fell 0.4 percent to 6.6295. The contracts reflected bets for the currency to rise 3 percent in a year.

China is preventing its currency from appreciating after overseas sales slumped 11 straight months through September. Exports fell 13 percent from a year earlier in October, the smallest decline this year, according to the median estimate of 31 economists surveyed by Bloomberg. The customs bureau will release the latest export data tomorrow.

Appreciation Forecasts

The currency will strengthen to 6.7 per dollar by June 30, according to the median estimate of 25 analysts in a Bloomberg News survey. The yuan has a 73 percent chance of rising to that level by the end of the first half of 2010, implied volatility from options trading monitored by Bloomberg showed.

China’s economy expanded 8.9 percent in the third quarter, the fastest pace in a year, according to official data. The government is targeting growth of 8 percent in 2009.

Rising asset prices and capital inflows may “persuade” the central bank to allow the yuan to appreciate next year, the Chinese Academy’s Zhang said from Beijing. It may rise about 5 percent against the U.S. currency, he said.

The Shanghai Stock Exchange Composite Index climbed 76 percent this year, the 10th best performer among 89 benchmark measures tracked by Bloomberg. China’s foreign-exchange reserves have risen 19 percent in the past year to a record $2.273 trillion because of capital inflows and a trade surplus.

“Even when the central bank wants to change the yuan policy, it will have to deal with pressure from the commerce ministry and local governments in the coastal areas,” Zhang said.

Inflation Risk

Consumer prices slid 0.8 percent in September from a year earlier. Government data to be released tomorrow may show prices fell 0.4 percent last month, a separate Bloomberg survey showed.

China, which buys U.S. dollars to prevent the yuan from appreciating, was the biggest foreign holder of U.S. government debt in August with $797.1 billion, Treasury Department data show. Premier Wen Jiabao said in March that he was “worried” about the weakening dollar eroding the value of its reserves.

The Dollar Index, which tracks the greenback against currencies of six major trading partners, dropped 7.6 percent this year, the most since 2007.

The government will probably allow a 3 percent to 4 percent increase in the yuan next year to curb the size of reserves and preserve their value as the dollar declines, said Shen Minggao, chief economist in Hong Kong for Greater China at Citigroup Inc.

“Capital inflows to China have quickened and the growth in China’s exchange reserves remained fast, which seems hard to sustain,” he said. “The yuan’s appreciation is not only called for overseas, it’s also in line with China’s own interest.”

--Judy Chen, Belinda Cao. Editors: Shanthy Nambiar, Sandy Hendry

To contact Bloomberg News staff for this story: Judy Chen in Shanghai at +86-21-6104-7047 or Xchen45@bloomberg.net.

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Tighter Bank Lending Standards Reinforce Fed Decision on Rates

By Scott Lanman

Nov. 10 (Bloomberg) -- The Federal Reserve said U.S. banks kept tightening lending standards for companies and consumers last quarter, reinforcing the central bank’s decision to leave its benchmark interest rates at record lows for a long time.

At the same time, the number of banks making it tougher to borrow diminished, the Fed said yesterday in its quarterly Senior Loan Officer survey. Demand for most types of loans weakened at a smaller number of banks than in the second quarter, the survey showed.

The report helps explain why Fed policy makers last week said “tight credit” remains a drag on the economy and pledged to keep their benchmark interest rate near zero for an “extended period.” JPMorgan Chase & Co. is among the banks that have reduced lending in response to stricter underwriting standards for consumer loans and lower demand among companies.

“The fact that banks are still tightening standards is just another reason why the Fed is not going to be raising rates anytime soon,” said Dean Maki, chief U.S. economist at Barclays Capital Inc. in New York, who predicts the Fed won’t tighten until September.

While the Fed isn’t about to raise rates, with fewer banks making it tougher to borrow, “credit may be less of a headwind to growth in coming quarters than is commonly believed,” said Maki, a former Fed economist. The percentage of banks tightening standards was “quite similar” to the end of the last recession, in 2001, he said.

Separately, the Fed said yesterday that nine of 10 bank holding companies deemed short of capital in May have raised their reserves enough to withstand the risk of higher unemployment and slower economic growth.

Talks With Treasury

The one exception, GMAC Inc., “is expected to meet its remaining buffer need by accessing” one of several government programs to help the auto industry, the Fed said. GMAC is “in discussions with the U.S. Treasury on the structure of its investment,” it said.

The survey of loan officers at 57 U.S. banks and 23 U.S. branches of foreign banks was conducted from about Oct. 6 to Oct. 20, the central bank said. The report doesn’t identify respondents.

Loans and leases held by U.S. commercial banks have declined for 10 straight months, falling to $6.7 trillion as of Oct. 28 from $7.2 trillion at the end of 2008, according to a separate statistical release from the Fed.

Commercial and industrial loans have dropped to $1.37 trillion from $1.6 trillion, commercial real-estate loans have declined to $1.66 trillion from $1.72 trillion, and consumer loans have fallen to $847 billion from $857 billion at the end of last year.

Commercial Loans

In response to a special question on the decline in commercial and industrial loans, banks cited lower originations of loans and decreased draws on revolving credit lines as the two most important reasons for the drop.

About a net 15 percent of banks tightened standards on commercial and industrial loans, half of the prior survey and below the peak of about 80 percent a year ago, the Fed said. Also, about a net 15 percent of respondents said they tightened standards for credit-card loans, the smallest since April 2008 and down from 35 percent in the July survey.

Banks were extending commercial real estate loans more often than refinancing them, the survey showed. About 75 percent reported extending more than one-fourth of construction and land development loans scheduled to mature by September.

The Standard & Poor’s 500 Index advanced 2.2 percent to 1,093.08 at 4:05 p.m. in New York for its sixth straight gain. Financial companies gained the most of 10 industry groups in the S&P 500, adding 3.6 percent collectively.

‘Work Constructively’

Last month, the Fed and other regulators urged commercial real estate lenders to “work constructively” to arrange modifications with borrowers who show a willingness to repay debt.

Loan originations by the biggest U.S. banks receiving government assistance fell by 17 percent in August from a month earlier, the Treasury Department said Oct. 15.

In its monthly survey of lending by the top 22 recipients of capital injections from the $700 billion Troubled Asset Relief Program, the Treasury also said total loan balances fell by 1 percent in August from a month earlier.

Loans at New York-based JPMorgan fell to $653.1 billion at the end of the third quarter from $761.4 billion a year earlier. The decline reflected “some tightening of underwriting standards” on consumer loans, including credit cards, Chief Financial Officer Michael Cavanagh told analysts during an Oct. 14 call following the release of the quarter’s results. Loan demand from companies also fell, he added.

Bank of America Corp.’s loans and mortgages shrank to $878.4 billion from $922.3 billion a year earlier. The drop was due to “lower consumer spending and a resurgence in the capital markets” that allowed corporations to issue bonds and equity to pay off debt, Kenneth Lewis, chief executive officer of the Charlotte, North Carolina-based bank, said on an Oct. 16 conference call with analysts after the third-quarter report.

To contact the reporter on this story: Scott Lanman in Washington at slanman@bloomberg.net.

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Europe Finance Chiefs Commit to Curb Budget Deficits

By Jennifer Ryan and Francois de Beaupuy

Nov. 10 (Bloomberg) -- European Union finance ministers committed to start reining in budget deficits by 2011 at the latest even as they said economic stimulus remains necessary to nurture the recovery from the deepest slump in six decades.

“Restoring the public finances and tackling unemployment will be the priorities for the time to come,” Spanish Economy Minister Elena Salgado told a press conference in Brussels late yesterday after leading a meeting of euro-area finance chiefs. “Without doubt, public finances are on an unsustainable course,” said Swedish Finance Minister Anders Borg, whose government holds the EU’s rotating six-month presidency.

European governments have put forward billions of euros in measures aimed at reviving growth and saving jobs. The average budget shortfall in the euro region will balloon to a record 6.9 percent of gross domestic product next year with all 16 euro nations breaching the EU limit of 3 percent of GDP, the European Commission forecasts. The jobless rate is projected to reach 10.9 percent in 2011, the most since at least 1995.

The commission, the Brussels-based EU executive, tomorrow will issue reports assessing efforts by France, Spain, Ireland, Greece and the U.K., which isn’t in the euro area, to start to bring their deficits back into line with EU rules. Germany, Europe’s largest economy, and eight other countries will be given deadlines to correct their deficit overruns.

‘Adequate Deadlines’

“We need to establish the adequate deadlines and paths for the correction of these excessive deficits,” EU Economic and Monetary Affairs Commissioner Joaquin Almunia said today in Brussels, where the euro-area finance chiefs will be joined by their counterparts from the rest of the 27 EU nations. “It is an important issue that we have to combine with short-term fiscal stimulus that is still needed.”

Overall government debt for the 27 nations in the EU will reach 79 percent of GDP in 2010 and more than 83 percent the following year, the commission forecast last month. Without budget-cutting efforts, the debt-to-GDP ratio “could reach 100 percent as early as 2014 and keep on increasing,” according to a commission document discussed at yesterday’s meeting.

The finance ministers last month agreed to wait until 2011 before cutting deficits to allow government spending to boost growth while the region recovers from the recession. Almunia affirmed that timeframe following yesterday’s meeting.

Fiscal Exit

“If things go the way most central projections suggest, then 2011 would be the year to start consolidation and fiscal exit,” Dutch Finance Minister Wouter Bos said. “We shouldn’t stop stimulating too early.”

The euro-region economy will contract 4 percent this year before expanding 0.7 percent in 2010, according to the forecasts by the commission, the EU executive. European Central Bank President Jean-Claude Trichet said yesterday that while the recovery is taking hold a little faster than expected, risks to growth mean there is “no time for complacency.”

Group of 20 governments meeting in St. Andrews, Scotland, on Nov. 7 pledged to keep interest rates low and maintain record budget deficits until recoveries take hold. Global stocks rallied yesterday and the dollar slid after the G-20 commitment to maintain stimulus efforts. Trichet said central bankers agreed on the need for a “gradual and timely phasing out” of non-conventional policy measures without signaling that such a move was imminent.

Banking Industry

Ministers also will discuss how to phase out support for the banking industry. EU governments have provided 920 billion euros ($1.4 trillion) in guarantees for the financial-services industry, and officials should begin making the national plans “less attractive” by bringing the pricing of aid “closer to market conditions,” according to a draft report by EU regulators to be discussed at today’s meeting.

The U.K. last week gave more support to Royal Bank of Scotland Group Plc, making it the most expensive bank bailout ever. Barclays Plc, the U.K.’s second-biggest bank, said today that third-quarter earnings fell 54 percent as impairment charges increased.

“The tricky thing for ministers is that there is no one- size-fits-all policy for the all the countries,” Carsten Brzeski, senior economist at ING Belgium SA in Brussels, said in an interview today with Bloomberg Television. “We have different problem cases now.”

To contact the reporters on this story: Jennifer Ryan in Brussels at jryan13@bloomberg.net; Jurjen van de Pol in Brussels at jvandepol@bloomberg.net.

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Oil Falls as Tropical Storm Ida Weakens in Gulf, Dollar Gains

By Christian Schmollinger

Nov. 10 (Bloomberg) -- Crude oil fell in New York after Tropical Storm Ida weakened in the Gulf of Mexico as it headed for the U.S. Gulf coast, reducing the potential of further supply disruptions.

Ida’s sustained winds have dropped to 60 miles (97 kilometers) per hour from 65 mph earlier, the National Hurricane Center said on its Web site. Producers have begun preparations to resume operations. Oil also declined as the dollar rebounded from a two-week low against the euro, reducing the appeal of commodity as an inflation hedge.

“Most people feel that the storm isn’t going to be that severe,” said Anthony Nunan, an assistant general manager for risk management at Mitsubishi Corp. in Tokyo. “This is the last hurrah for the hurricane season.”

Oil for December delivery declined as much as 86 cents, or 1.1 percent, to $78.57 a barrel in electronic trading on the New York Mercantile Exchange. It was at $78.62 a barrel at 3:54 p.m. Singapore time. Yesterday, the contract rose $2, or 2.6 percent, to $79.43. Prices have gained 76 percent this year.

Ida was centered 100 miles south-southwest of Mobile, Alabama, at 9 p.m. local time and was moving north at 13 mph, the center said. Workers were evacuated in the Gulf of Mexico and companies idled 29.6 percent of oil and 27.5 percent of natural gas output, according to government data.

Marathon Oil Corp. said it may start work on bringing output back tomorrow. The company had evacuated and shut in production at a platform located at Ewing Bank 873, which can produce the equivalent of about 12,000 barrels of oil a day, Lee Warren, a company spokesman, said in an e-mail.

U.S. Stockpiles

The dollar climbed on prospects investors reduced short positions on the currency before a U.S. public holiday tomorrow. The greenback traded at $1.4991 per euro as of 3:16 p.m. in Singapore from $1.4999 in New York yesterday, when it touched $1.5020, the lowest since Oct. 26.

U.S. crude-oil inventories probably rose 1 million barrels in the week ended Nov. 6, according to the median of 10 estimates by analysts before an Energy Department report.

Supplies of distillate fuel, a category that includes heating oil and diesel, declined 700,000 barrels from 167.4 million the prior week, according to the survey. Gasoline stockpiles probably dropped 400,000 barrels from 208.3 million in the week before, the survey showed.

The department is scheduled to release its weekly report on Nov. 12 at 11 a.m. in Washington, a day later than usual because of the Veterans’ Day holiday on Nov. 11.

Brent crude for December settlement fell as much as 87 cents, or 1.1 percent, to $76.90 on the London-based ICE Futures Europe exchange. It was at $77.08 a barrel at 3:58 p.m. Singapore time. Prices rose $1.90, or 2.5 percent, to $77.77 a barrel yesterday.

World Reserves

World oil reserves are more depleted than official estimates state, the Guardian reported, citing a whistleblower at the International Energy Agency.

The IEA has been underplaying a future oil shortage while overplaying the chances of finding new reserves under pressure from the U.S. amid a fear of triggering panic buying, the newspaper reported, citing an unidentified senior official at the IEA.

Peak oil critics have often wrongly questioned the accuracy of its figures, the IEA said last night, ahead of the publication of its World Energy Outlook report today, the newspaper said.

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

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Euro May Fall to 8-Week Low Against Pound: Technical Analysis

By Ron Harui

Nov. 10 (Bloomberg) -- The euro may fall to an eight-week low against the British pound should it drop below so-called support at 89.06 pence, said Pak Lai Ng, a technical analyst at Forecast Pte in Singapore, citing trading patterns.

Europe’s currency is likely to test that level in a week, Ng said. The support is a 50 percent retracement of the euro’s rise from its June low of 84.01 pence to the October high of 94.12 pence, based on a series of numbers known as the Fibonacci sequence.

“The euro-pound looks like it’s going to break down,” Ng said in an interview. “It may test that Fibonacci level and then the 200-day and 100-day moving averages” of 88.65 pence and 88.20 pence, respectively, he said.

The euro traded at 89.46 pence as of 8:02 a.m. in Tokyo from 89.49 pence in New York yesterday. The 88.20 pence level would be the lowest since Sept. 15. Europe’s currency has weakened 3.8 percent versus the pound in the past month.

Daily momentum indicators such as the moving average convergence/divergence, or MACD, show a sell signal for the euro against the pound, according to Ng. “The focus is still on the downside,” he said.

MACD charts can indicate whether a price shift is a change in trend or a short-term deviation by comparing moving averages based on nine-, 12- and 26-day periods. Fibonacci charts are based on the theory that securities tend to rise or fall by specific percentages after reaching a new high or low. A break below support or above resistance indicates a currency may move to the next level.

In technical analysis, investors and analysts study charts of trading patterns and prices to forecast changes in a security, commodity, currency or index. Support is a level where buy orders may be clustered, while resistance is where there may be sell orders.

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

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South Korean Won Rises to 13-Month High; Bonds Little Changed

By Bob Chen

Nov. 10 (Bloomberg) -- South Korea’s won traded near a 13- month high after the Group of 20 nations agreed to maintain economic stimulus measures, bolstering demand for Asian exports and helping emerging markets attract funds.

Foreign investors bought more Korean shares than they sold for a third day, driving the Kospi index to its best close this month. Japan today reported an unexpected widening of its current-account surplus for September as stimulus spending helped damp a slump in the nation’s overseas sales. The won retraced earlier gains today after South and North Korean warships exchanged fire.

“Increasingly the outlook for risk is very good,” said Wai Ho Leong, a regional economist in Singapore at Barclays Plc. “Japan’s current-account surplus helps the perception of Asia’s recovery story and deepens it somewhat. The question is where you should invest in Asia, and Korea and Taiwan come off as strong cyclical recovery stories.”

The won traded at 1,162 per dollar as of the 3 p.m. close in Seoul, from 1,160.8 yesterday, according to data compiled by Bloomberg. It touched 1,154.80, the strongest level since September 2008. Leong forecast the currency will reach 1,150 in a month and 1,135 by early February. The Kospi advanced 0.4 percent to 1,582.30.

European Central Bank President Jean-Claude Trichet, speaking on behalf of the world’s central bankers, said yesterday the global economy is recovering a little faster than expected. U.K. Chancellor of the Exchequer Alistair Darling, hosting a meeting of finance ministers from G-20 nations, said Nov. 7 that he and his counterparts “agreed to maintain support for the recovery until it is assured.”

Shots Fired

A North Korean vessel ventured 1.3 kilometers (0.8 miles) into waters claimed by South Korea at about 10:33 a.m. local time today, triggering an exchange of fire, according to the Joint Chiefs of Staff in Seoul. The ship returned across the border after it was badly damaged in the exchange, Yonhap News reported, citing a government official it didn’t identify.

“Regional currencies weakened after news of the Korean ships and following strength in the greenback,” said Dariusz Kowalczyk, chief investment strategist at SJS Markets Ltd. in Hong Kong. “The timing of the weakening of the won is very correlated with the first report of the ships.”

Japan’s current-account surplus rose 0.2 percent from a year earlier to 1.57 trillion yen ($17.5 billion) in September, the finance ministry reported today. The median estimate of 22 economists surveyed by Bloomberg was for the gap to narrow to 1.51 trillion yen. A separate survey forecast China’s exports fell at the slowest pace this year in October, before data to be released tomorrow.

South Korea’s government bonds were little changed. The yield on the 4 percent note due June 2012 was 4.48 percent, according to Korea Stock Exchange.

For Related News and Information: For top currency news: TOP FRX For news on analyst reports: NI ANAFX Most read stories on Korea: MNI KOREA

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Kingsgate Seeking $50 Million Loan for Thai Gold Mine

By Jesse Riseborough

Nov. 10 (Bloomberg) -- Kingsgate Consolidated Ltd., owner of Thailand’s biggest gold mine, is seeking a loan of about $50 million to finance half the cost of a plant expansion at its Chatree project that is forecast to double production by 2011.

“We are going to be financing $100 million, we want to do some from internal cash flow and some will come from the debt markets,” Gavin Thomas, chief executive officer of the Sydney- based company, said today by phone. Kingsgate is in talks with Investec Plc for a $25 million loan and for a similar amount from a group of Thai banks, he said.

Gold futures climbed to a record for the second straight session yesterday as the slumping dollar spurred demand for the precious metal as an alternative investment. A $100 million expansion will double capacity at the plant to as much as 240,000 ounces a year, according to the company.

“At this stage, I would expect that as long as everything stays pretty stable and we can get some support from the Thai government, I think the project will probably go ahead,” Thomas said, adding that the plan will likely go to the board for approval within the next two months. “There’s been meetings and trips to site, they are progressing along well.”

Kingsgate advanced 3.8 percent to a record A$9.34 at the 4:10 p.m. Sydney time on the Australian stock exchange. That’s the highest since the company began trading its shares in 1988. The stock has more than doubled this year and has a market value of A$902 million ($836 million).

Production will be at the “upper end” of the company’s forecast for between 120,000 and 140,000 ounces of gold in the 2010 fiscal year, Thomas said.

The price of gold for immediate delivery was dropped 0.3 percent to $1,100.27 an ounce at 4:21 p.m. Sydney time.

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

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Copper Drops for First Day in Three in Shanghai on Inventories

By Glenys Sim

Nov. 10 (Bloomberg) -- Copper fell for the first time in three days in Shanghai as global inventories extended their advance, easing concerns supply may not keep pace with demand.

Inventories tallied by the London Metal Exchange expanded for a fifth day to a six-month high of 389,475 metric tons yesterday, while stockpiles monitored by Comex stood at 65,590 short tons yesterday, the highest since August 2004. Stockpiles in Shanghai warehouses expanded 1,440 tons last week to 104,275 tons, the highest level since April 2004.

“To date, the increase in exchange copper stocks has not proved to be as much of a drag on the copper price as we had anticipated, but does represent an ongoing source of downside risk,” David Moore, commodity strategist at Commonwealth Bank of Australia, said in an e-mail today.

February-delivery copper on the Shanghai Futures Exchange dropped as much as 1.5 percent to 50,780 yuan ($7,437) a ton and ended the day at 50,860 yuan

Copper for delivery in three months on the London Metal Exchange lost as much as 0.3 percent to $6,520 a ton, before trading at $6,534.75 at 3:12 p.m. Singapore time. The December- delivery contract on the Comex division of the New York Mercantile Exchange was little changed at $2.9620 a pound.

The dollar’s rebound before the Veterans Day holiday in the U.S. tomorrow weighed on commodities from copper to crude oil and gold. The dollar rose today against a basket of six main trading partners, after falling to a 15-month low yesterday.

‘Not Unexpected’

Still, the increase in exchange copper stockpiles “is not unexpected,” said Moore. “There is some seasonality to copper market balances and, therefore, copper surpluses. The market tends to be less tight in the second half,” he added.

A labor dispute at BHP Billiton Ltd.’s Spence copper mine in Chile helped limit the metal’s losses. Workers walked out Oct. 13 after rejecting a wage offer and plan to stage a protest outside the company’s office in Santiago tomorrow, a union official said yesterday.

Among other LME-traded metals, aluminum fell 0.4 percent to $1,945 a ton, lead lost 1.7 percent to $2,260 a ton, and nickel slid 0.6 percent to $17,320 a ton. Zinc declined 0.5 percent to $2,150.25 a ton, while tin dropped 0.3 percent to $14,710 a ton as of 3:12 p.m. in Singapore.

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

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Japan Stocks Rise, Led by Banks After Kamei Comments on Capital

By Akiko Ikeda and Kana Nishizawa

Nov. 10 (Bloomberg) -- Japanese stocks rose, led by banks after Financial Services Minister Shizuka Kamei said the government is willing to tolerate domestic banks “briefly” falling below capital ratios to ensure the supply of credit.

Mitsubishi UFJ Financial Group Inc., the country’s biggest bank by market value, gained 2.7 percent, and Sumitomo Mitsui Financial Group Inc. added 3.6 percent. Bank shares spiked this morning after the minister’s comments and were the biggest contributors to gains in the Topix index at the close of trading. Casio Computer Co. climbed 4.4 percent after Citigroup Inc. boosted its investment rating on the maker of G-Shock watches.

“Kamei’s comments gave some breathing room to domestic banks, which were bound by the capital requirements,” said Masaru Hamasaki, a strategist at Tokyo-based Toyota Asset Management Co., which oversees the equivalent of $14 billion. “They’re giving a sense of relief to the market.”

The Nikkei 225 Stock Average rose 0.6 percent to 9,870.73 at the close of trading in Tokyo. The broader Topix added 0.2 percent to 872.44, with nine stocks advancing for every seven that retreated.

The Topix fell 0.4 percent yesterday, the only benchmark gauge among the world’s 20 largest stock markets to decline. Shares in the index trade at 36 times estimated earnings on average, compared with 20 at the beginning of the year.

In New York yesterday, the Standard & Poor’s 500 Index advanced 2.2 percent for its sixth straight increase, led by financial companies, after the Group of 20 agreed to maintain economic stimulus measures.

Banks Lead Advance

Mitsubishi UFJ climbed 2.7 percent to 503 yen and was the most-actively traded stock by value in Japan. Sumitomo Mitsui Financial Group added 3.6 percent to 3,170 yen. Mizuho Financial Group Inc. increased 1.1 percent to 178 yen.

Local banks that use domestic accounting standards won’t be punished if their capital-adequacy ratios slip below 4 percent for a limited period of time, Kamei told reporters in Tokyo today. The minister said his focus is on making sure banks continue lending.

The country’s largest banks use international standards and are required to keep their capital-adequacy ratios, a key measure of financial strength, above 8 percent.

Casio jumped 4.4 percent to 706 yen, the biggest gain since Aug. 28. The maker of watches and calculators had its rating raised to “hold” from “sell” by Kota Ezawa at Citigroup.

Hoya Corp., Japan’s largest maker of optical glass, rose 1.2 percent to 2,170 yen, its highest close since Sept. 24, after Ryohei Takahashi, an analyst at Bank of America Corp.’s Merrill Lynch unit, boosted his rating to “buy” from “underperform” and increased a 12-month share price estimate by 43 percent to 2,500 yen.

Dainippon Screen Manufacturing Co. advanced 7.8 percent to 385 yen, its sharpest advance since Oct. 7. The maker of chip- equipment narrowed its forecast full-year net loss to 12 billion yen from 15 billion yen, as orders from makers of semiconductors and liquid-crystal display panels begin to rise.

To contact the reporters for this story: Akiko Ikeda in Tokyo at iakiko@bloomberg.net; Kana Nishizawa in Tokyo at knishizawa5@bloomberg.net.

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Areva, Arkema, Klepierre, Meetic, Sodexo: French Equity Preview

By Helene Fouquet and Adria Cimino

Nov. 10 (Bloomberg) -- The following is a list of companies whose shares may have unusual price changes in France. Symbols are in parentheses after company names and prices are from the last close.

November futures on France’s CAC 40 Index climbed 5, or 0.1 percent, to 3,774 at 8:38 a.m. in Paris. The CAC 40 rallied 78.2, or 2.1 percent, to 3,785.49 yesterday.

Areva SA (CEI FP): The world’s biggest builder of nuclear reactors received three bids for its transmission and distribution unit from General Electric Co., Toshiba Corp. with Innovation Network Corp. of Japan, and the unit’s former owner, Alstom SA with Schneider Electric SA. Areva’s investment certificates added 11.4 euros, or 3.2 percent, to 367.95 euros.

Arkema SA (AKE FP): The French chemicals maker said that it’s raising its 2009 free cashflow target to 140 million euros ($210 million) from 80 million euros. The company reported a net loss of 3 million euros for the third quarter, compared with a year-earlier profit of 40 million euros. The shares rose 95 cents, or 3.5 percent, to 28.07 euros.

CGGVeritas (GA FP): The world’s largest seismic surveyor reported a 93 percent plunge in third-quarter profit amid a slowdown in oil exploration projects. Net income fell to $12 million from $162 million a year earlier. The stock added 79 cents, or 5.6 percent, to 14.98 euros.

GFI Informatique SA (GFI FP): The computer-services company reported third-quarter revenue of 169.2 million euros that was “in line with expectations.” The shares retreated 2 cents, or 0.6 percent, to 3.38 euros.

Klepierre SA (LI FP): The property company agreed to buy a further 21.3 percent stake in Italian mall owner IGC from Finiper for an estimated 47.6 million euros. The acquisition will raise Klepierre’s holding in IGC to 71.3 percent. The shares climbed 46 cents, or 1.6 percent, to 28.81 euros.

Meetic (MEET FP): Europe’s biggest publicly traded Internet dating site reported nine-month revenue of 117.2 million euros, up from 97 million euros a year earlier. The shares rose 9 cents, or 0.4 percent, to 20.39 euros.

Rougier SA (RGR FP): The French tropical-wood trader reported nine-month revenue of 91.5 million euros, down 28 percent. The shares advanced 45 cents, or 1.7 percent, to 26.86 euros.

Societe Fonciere Lyonnaise (FLY FP): The real-estate company reported nine-month revenue of 139.6 million euros, up from 135.4 million euros a year earlier. The shares fell 29 cents, or 0.9 percent, to 31.70 euros.

Sodexo (SW FP): The world’s second-biggest catering company said full-year profit gained 4.5 percent to 393 million euros after it added new hospitals to its client list and improved profitability in North America. The shares retreated 4 cents, or 0.1 percent, to 41.19 euros.

To contact the reporter on this story: Helene Fouquet in Paris at hfouquet1@bloomberg.net

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Palm Oil Climbs to Highest in More Than Two Months on Exports

By Luzi Ann Javier

Nov. 10 (Bloomberg) -- Palm oil advanced to its highest level in more than two months as exports from Malaysia, the world’s second-biggest producer, climbed 19 percent in the first 10 days of November.

Palm oil for January delivery added as much as 0.8 percent to 2,285 ringgit ($676) a metric ton on the Malaysia Derivatives Exchange, the highest price since Sept. 1, before trading at 2,270 ringgit by the 12:30 p.m. break.

Futures may increase to 2,400 ringgit a ton by the first quarter as demand from India and China, the biggest consumers, recovers and El Nino may hurt output next year, according to Dorab Mistry, director of Godrej International Ltd.

“Supply worries, a pickup in demand due to the Chinese New Year festivities, global economic recovery, a smaller domestic oilseed crop from India” and increased mandates for biofuel may push prices higher through the first quarter, Ivy Ng, an analyst at CIMB Investment Bank Bhd., said in a report.

Exports of palm oil from Malaysia jumped to 403,302 tons from Nov. 1 to Nov. 10 from 339,195 tons in the same period in October, independent market surveyor Intertek said today.

Global palm oil production, including output from Indonesia and Malaysia, will expand 6.2 percent to 46.5 million tons next year, compared with a four-year average growth rate of 8.4 percent, Ng said, citing estimates from Oil World, a global oilseed information provider.

El Nino, which can parch crops in Asia and cause flooding in South America, may increase palm oil supply worries, Ng said.

El Nino

“The current El Nino has so far brought a weaker monsoon to India and sub-par rainfall in Indonesia and Malaysia in July- to August,” Ng said. “The weather forecasters indicate that the most likely outcome for El Nino is to peak with at least moderate strength.”

Palm oil stockpiles in Malaysia climbed 25 percent to 1,974,462 tons in October from the previous month, the Malaysian Palm Oil Board said in a statement today after the market closed for midday. Output rose 27.4 percent to 1,985,055 tons and exports were up 11.8 percent to 1,478,317 tons.

Crude oil dropped 0.7 percent to $78.89 a barrel and soybean oil slipped 0.8 percent to 37.87 cents per pound.

To contact the reporter on this story: Luzi Ann Javier in Singapore at ljavier@bloomberg.net

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Asian Stocks Rise on Export Data; Pound Falls on Rating Concern

By Patrick Rial and Shiyin Chen

Nov. 10 (Bloomberg) -- Asian stocks rose for a third day as Chinese car sales jumped and exports improved in Taiwan and the Philippines. The pound fell after Fitch Ratings said the U.K. was the most at risk of losing its AAA rating.

The MSCI Asia Pacific Index gained 0.5 percent to 118.17 as of 3:32 p.m. in Tokyo, paring a climb of as much as 1.2 percent. China’s Shanghai Composite Index advanced for an eighth consecutive day. Oil retreated as concern abated Tropical Storm Ida will cause damage to Gulf of Mexico production facilities.

Hyundai Motor Co., South Korea’s biggest automaker, added 2.4 percent after a report showed a 76 percent gain in China passenger vehicle sales in October. Taiwan’s Compal Electronics Inc., the world’s largest laptop computer maker, climbed 2.2 percent after its sales rose 61 percent last month. Taiwan and the Philippines posted the smallest export declines in at least 10 months. Japan’s current-account surplus unexpectedly widened.

“Risk appetite has come back and there’s still cash waiting to be invested,” said Manpreet Gill, Singapore-based strategist for Asia at Barclays Wealth, which has $223 billion in assets. “We’re still overweight equities as an asset class given we’re still in the first 12 months after the bottom in equities and interest rates remain low.”

Willing to Take Risk

The pound weakened to as low as $1.66, compared with $1.679 earlier today after David Riley, head of global sovereign ratings at Fitch, said in an e-mailed statement the U.K. is the most at risk of losing its AAA status among top-rated nations because the country needs “the largest budget adjustment.”

The euro fell 0.1 percent to $1.4982, after touching $1.5020 yesterday, the highest since Oct. 26. It fell 0.2 percent to 134.62 yen. The yield on the U.S. 10-year government note was little changed at 3.49 percent, after declining for two days, ahead of a record $25 billion auction today.

The Fitch “comments injected a small dose of risk aversion into the market, lifting the dollar and the yen,” Sue Trinh, senior currency strategist at RBC Capital Markets, wrote in a research note today.

The Taiwan dollar climbed 0.2 percent to NT$32.33 per dollar. The Philippine peso reached the strongest level since Oct. 20, gaining 0.2 percent to 46.81, after the statistics office today said exports dropped 18.3 percent in September from a year earlier, the least in 10 months.

Financial shares led regional gains after Industrial & Commercial Bank of China Ltd., the country’s largest lender, and Commonwealth Bank of Australia were upgraded by brokerages and Japan’s Financial Services Minister Shizuka Kamei said domestic banks won’t be punished if their Tier 1 capital ratios fall briefly below 4 percent.

“Maximum Impact”

ICBC jumped 1.8 percent to HK$6.78 in Hong Kong, while Bank of China Ltd. advanced 1.5 percent. Credit Suisse Group AG lifted both shares to “outperform” from “neutral,” citing lower-than-expected credit costs in their latest earnings reports. Commonwealth Bank, Australia’s biggest lender, gained 0.9 percent to A$55.55 after UBS AG recommended buying the shares. An index of Japanese banks included in the Topix index rallied 1.6 percent.

G-20 finance ministers pledged in St. Andrews, Scotland, on Nov. 7 to keep interest rates low and maintain record budget deficits until economic recoveries take hold. The U.S. is feeling the “maximum impact” now from the federal government’s $787 billion in fiscal stimulus, former Federal Reserve Chairman Alan Greenspan said yesterday.

AMP Upgrade

Australian wealth manager AMP Ltd. jumped 4.4 percent to A$6.39 after Citigroup Inc. upgraded the shares to “buy” from “hold.” Axa SA, France’s biggest insurer, and AMP may sweeten their bid for Axa Asia Pacific Holdings Ltd. to about A$12.4 billion ($11.6 billion) after a first offer was rejected, Citigroup said. Axa Asia Pacific rose 1.2 percent, buoyed by an upgrade to “neutral” from “underperform” by Credit Suisse.

China yesterday reported passenger car sales of 8.19 million for the first 10 months of 2009, making the nation the leading auto market this year. Chinese home prices rose 3.9 percent in October from a year earlier, the most in 14 months, the statistics bureau said today. Hyundai Motor, which cited growth in China as one reason it posted record third-quarter profit, gained 2.4 percent to 105,000 won.

Rubber futures rose as much as 1.2 percent to the highest in two weeks on speculation tire demand will increase. Japan’s Toyo Tire & Rubber Co. jumped 0.6 percent after Nomura Holdings Inc. boosted the shares to “buy” from “neutral.”

‘Worst Is Over’

Japan’s Nikkei 225 Stock Average added 0.6 percent to 9,870.73. Taiwan’s Taiex Index advanced 0.8 percent.

South Korea’s Kospi Index added 0.4 percent, paring a gain of as much as 1.5 percent after Yonhap News reported the nation’s navy clashed with North Korean forces. There were no South Korean casualties, according to the news agency.

Japan’s current-account surplus widened in September to 1.57 trillion yen ($17.5 billion) from a year earlier, fueled by growth in China, the Ministry of Finance said today.

“The worst is over,” said Masamichi Adachi, senior economist at JPMorgan Chase & Co. in Tokyo. “Exports are on a gradual recovery path. That said, they’re still at a very low level compared to their peak.”

Taiwan stocks rose for the third day after October exports fell the least in 13 months on increased demand for mobile phones, computers and other electronics from China. Compal Electronics rose to NT$41.90, the highest since November 2003.

Risk Outlook ‘Good’

“Increasingly the outlook for risk is very good,” said Wai Ho Leong, a regional economist in Singapore at Barclays Plc. “Japan’s current-account surplus helps the perception of Asia’s recovery story and deepens it somewhat. The question is where you should invest in Asia, and Korea and Taiwan come off as strong cyclical recovery stories.”

Gold futures for December delivery slipped 0.3 percent to $1,098.20 an ounce in late trading after climbing to an intraday record of $1,111.70 yesterday.

Crude oil fell 0.7 percent to $78.85. It jumped as much as 3.6 percent yesterday as Tropical Storm Ida entered the Gulf of Mexico, disrupting more than a quarter of the area’s oil and gas production, and the dollar weakened.

“Most people feel that the storm isn’t going to be that severe,” said Anthony Nunan, an assistant general manager for risk management at Mitsubishi Corp. in Tokyo. “This is the last hurrah for the hurricane season.”

To contact the reporter for this story: Patrick Rial in Tokyo at prial@bloomberg.net; Chen Shiyin; in Singapore at schen37@bloomberg.net

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BASF, Bilfinger, E.ON, RWE, Qiagen: German Equity Preview

By Julie Cruz

Nov. 10 (Bloomberg) -- The following is a list of companies whose shares may have unusual price changes in Germany. Stock symbols are in parentheses, and share prices are from the previous close. The benchmark DAX Index added 2.4 percent to 5,619.72.

BASF SE (BAS GY): The world’s largest chemical company, Akzo Nobel NV and Arkema SA may be fined by the European Union this week for fixing the price of a chemical used in plastic production, said five people with knowledge of the case. BASF shares advanced 2.5 percent to 38.50 euros.

Bilfinger Berger AG (GBF GY): Germany’s second-biggest builder said it aims to reduce the volume of its construction business to about 2 billion euros ($3 billion) in the “mid- term,” from 6 billion euros in 2008. The company also said it is considering an initial public offering for its Australian unit. The company is scheduled to report third-quarter earnings. The shares added 1.8 percent to 48.31 euros.

Qiagen NV (QIA GY): The Dutch biotechnology company said third-quarter adjusted profit rose to $53.5 million from $42.4 million a year earlier. Qiagen also said, in an e-mailed statement, that it’s raising its forecast for adjusted earnings per share for fiscal 2009 to between 88 cents to 90 cents from the previous range of 86 cents to 90 cents, based on currency exchange rates at Jan. 31. The company also said it plans to buy SABiosciences Corp. for $90 million in cash.

The shares increased 2.2 percent to 14.84 euros.

RWE AG (RWE GY): Germany’s second-biggest utility pulled out of the competition to get U.K. funding for a large carbon- capture and storage plant, leaving E.ON AG (EOAN GY) and Iberdrola SA’s Scottish Power as the remaining contenders.

Separately, E.ON may agree to sell its power network to Dutch electricity-grid operator Tennet BV this week, said two people familiar with the matter.

RWE rose 2 percent to 60.49 euros, while E.ON AG shares gained 3.2 percent to 27.05 euros.

To contact the reporter on this story: Julie Cruz in Frankfurt at jcruz6@bloomberg.net.

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European Stock-Index Futures Climb; BHP Billiton, Rio May Gain

By Sarah Jones

Nov. 10 (Bloomberg) -- European stock-index futures gained, indicating the Dow Jones Stoxx 600 Index may extend its longest winning streak in two months. Asian shares rose as Chinese car sales jumped and exports improved in Taiwan and the Philippines.

BHP Billiton Ltd., the world’s largest mining company, and Rio Tinto Group rallied in Sydney as gold traded near a record in Asia. Vodafone Group Plc will probably be active as the world’s biggest mobile-phone company reported a 2.9 percent increase in first-half operating profit. Barclays Plc may move after the U.K.’s second-largest bank reported lower third- quarter earnings.

Futures on the Euro Stoxx 50, a benchmark index for the euro region, added 0.3 percent at 7:28 a.m. in London. The U.K.’s FTSE 100 Index may rise 20, according to BGC Partners.

“The upward momentum is set to continue,” said Ben Potter, a Melbourne-based research analyst at IG Markets. “The miners specifically found support and this is adding to the general feel-good factor for equities.”

European shares yesterday climbed the most in three weeks and U.S. stocks surged after the Group of 20 nations agreed to maintain economic stimulus efforts. Asian stocks advanced for a third day today.

Even so, the global rally in equities lost pace in October on concern the rebound has gone too far relative to the prospects for economic growth. The Stoxx 600 is up 56 percent since March 9 even after dropping 2.3 percent last month.

Futures on the U.S. Standard & Poor’s 500 Index expiring in December slipped 0.3 percent today, while the MSCI Asia Pacific Index advanced 0.3 percent.

Vodafone, Barclays

BHP increased 2.3 percent to A$38.49 in Sydney as gold traded within half a percent of its record in Asia as a slumping dollar increased investor appetite for the bullion as a store of value. Rio Tinto, the world’s third-biggest mining company, gained 2.6 percent to A$67.45.

Vodafone may move. Earnings before interest, taxes, depreciation and amortization, or Ebitda, rose to 7.46 billion pounds ($12.4 billion) from 7.24 billion pounds a year earlier. The company also plans more cost cuts.

Barclays will probably be active after the lender reported a 54 percent drop in third-quarter profit to 1.08 billion pounds as impairment charges climbed. Impairments for the full year are “expected to be around the bottom end of the previously referenced 2009 consensus range of 9 billion pounds to 9.6 billion pounds,” the bank said today.

Volkswagen Stake

Volkswagen AG may move after Qatar Holding LLC, part of the country’s sovereign wealth fund, announced plans to sell as much as 25 million of its preferred shares in the German carmaker, or about half its total stake.

The fund still plans to increase its holdings in Volkswagen’s common shares to 17 percent. Units of Credit Suisse Group AG and Goldman Sachs Group Inc. will act as joint bookrunners in the sale of preferred shares.

Strategists at Credit Suisse today recommended investors increased their holdings in mainland European shares, upgrading the region to “overweight” from “underweight.”

“Continental Europe tends to outperform when both global lead indicators rise and earnings are being revised up, a combination we expect to continue into the first half of 2010,” strategists including Andrew Garthwaite wrote in a report dated today. “Europe tends to outperform when interest rate expectations start to rise.”

To contact the reporter on this story: Sarah Jones in London at sjones35@bloomberg.net.

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Continental European Stocks Upgraded at Credit Suisse

By Roger Neill

Nov. 10 (Bloomberg) -- Continental European shares were raised to “overweight” from “underweight” at Credit Suisse Group AG, which said Germany “looks particularly attractive.”

“Continental Europe tends to outperform when both global lead indicators rise and earnings are being revised up, a combination we expect to continue into the first half of 2010,” strategists including Andrew Garthwaite wrote in a report dated today. “Europe tends to outperform when interest rate expectations start to rise.”

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Corn, Soybeans Decline as Investors Lock in Gains, Oil Slumps

By Luzi Ann Javier

Nov. 10 (Bloomberg) -- Corn, soybeans and wheat declined on speculation some investors may be locking in gains after prices jumped in Chicago yesterday and as crude oil dropped, reducing the appeal of crops processed to make biofuels.

Corn rose 5.2 percent yesterday, the steepest gain since Oct. 12, while wheat had the strongest advance in more than two weeks and soybeans had the biggest rise in a week as the dollar plunged to a 15-month low against a basket of six major currencies and gold climbed to a record. Crude oil futures fell as much as 0.7 percent today after closing 2.6 percent higher yesterday in New York.

“You’d have some profit-taking following those gains overnight,” Toby Hassall, a research analyst at CWA Global Markets Pty said by phone from Sydney. “Oil prices are slightly weaker today, which can have an impact on the grain markets.”

December-delivery corn, which can be processed to make ethanol, lost as much as 1.7 percent to $3.795 a bushel on the Chicago Board of Trade. The most-active contract traded at $3.8125 a bushel, down 1.2 percent, at 2:23 p.m. Singapore time.

Wheat for December delivery last traded 1.1 percent lower at $5.1425 a bushel after surging as much as 5.4 percent yesterday. Soybeans for January delivery dropped 0.4 percent to $9.6825 a bushel. The contract closed 1.8 percent higher yesterday.

Futures also fell on speculation the U.S. Department of Agriculture may leave unchanged its estimates for soybean and corn output, Hassall said.

U.S. Forecasts

The USDA in October forecast U.S. soybean output would rise to a record 3.25 billion bushels, higher than 3.245 billion bushels estimated a month earlier. It also increased its U.S. corn output estimate to 13.018 billion bushels, the second- largest on record, from 12.955 billion bushels in September.

The department’s latest estimates for U.S. and global production and demand for soybeans, corn, wheat and rice are scheduled for release in Washington later today.

The average estimate among 28 analysts surveyed by Bloomberg News was for a corn crop of 12.962 billion bushels and a soybean harvest of 3.262 billion bushels.

Rice for January delivery was little changed at $15.205 per 100 pounds in after-hours electronic trading, after jumping as much as 1.4 percent yesterday.

Prices may gain on concern global output will fall behind demand after drought in India and crop damage from storms in the Philippines, Jonathan Barratt, managing director at Commodity Broking Services Pty said by phone from Sydney today.

State-run companies in India got bids for 30,000 tons of imported rice at three tenders yesterday, while the Philippines, the world’s biggest importer, issued a notice seeking 600,000 tons of the grain in the nation’s biggest tender ever.

“When you look at the market now and how it’s digesting the information, it sort of still wants to trade higher,” Barratt said. Futures may rise to around $16 per 100 pounds in Chicago on concerns that supply is declining, he said.

To contact the reporter on this story: Luzi Ann Javier in Singapore at ljavier@bloomberg.net

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Morning Forex Overview

Daily Forex Fundamentals | Written by Dukascopy Swiss FX Group | Nov 09 09 08:13 GMT |

Previous session overview The dollar gained slightly on the yen but retreated against the euro in Asian-hours trading Monday, as soaring gold futures pressured the greenback against its European counterpart. At the weekend meeting in Scotland of finance ministers and central bankers from the Group of 20 leading economic powers, attendees agreed to keep massive stimulus measures in place until the global recovery strengthens. In a report to the G20, the International Monetary Fund cited signs that the dollar is being used as a funding currency for carry trades, which involve borrowing funds denominated in lower-interest currencies such as the dollar and yen and investing in higher-yielding assets denominated in other currencies. On Friday, the dollar had edged lower against the yen and traded nearly flat against the euro, after a surprise jump in the U.S. jobless rate to more than 10% comforted views the Federal Reserve will stick to a loose monetary policy. The euro stood at JPY134.53 against the yen compared with JPY133.53. The dollar was also up slightly against the yen, at JPY90.09 compared with JPY89.96. Asian banks and other players scooped up the U.S. unit early in the Tokyo morning session, dealers said. On Friday EURUSD traded briefly above the USD1.4900 level as traders shrugged off the disappointing US jobs data to focus on the USD and US FED rates. Without heavy selling in the equity markets the Euro remained firm and closed at the USD1.4850 level. On Friday Pound fell against the dollar as the US jobs report came in less than encouraging. Investors continued the trend of buying safe-haven currencies with the announcement of negative economic news. A weaker U.S. dollar and bullish home lending numbers sent the Australian dollar sharply higher in Asia on Monday ahead of all-important jobs data later in the week Market expectation The U.S. dollar is trading lower against major currencies, including the euro and pound, with traders saying the U.S. jobs data has reinforced the greenback's downside bias. EURUSD trader's note that heavy offers, possibly option related, seen placed from USD1.4970 through to USD1.5000, adding that stops are seen placed through USD1.5010/20. Despite the disappointing U.S. unemployment number cutting risk appetite, the euro may climb back above the USD1.50 level before year-end, said analysts. For the rest of the week, dollar-yen may track moves in U.S. long-term interest rates, with some players expecting large-scale Treasury auctions this week to buoy yields to the greenback's benefit, dealers said. Any such rises could send the dollar up to around JPY92.00 later in the week, said analysts. European stock markets are expected to open higher Monday, with optimism on the up as merger and acquisition activity aids sentiment and the Group of Twenty concluded that global stimulus efforts would remain in place 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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