Tata Motors Seeks New CEO as Jaguar Plunges

By Siddharth Philip and Steven Rothwell - Sep 12, 2011 7:03 PM GMT+0700

Tata Motors Ltd. (TTMT), owner of the Jaguar and Land Rover brands, is being forced to search for a new chief executive officer as it struggles to revive sales of luxury cars amid a worsening debt crisis in Europe.

Carl-Peter Forster, 57, who helped the Jaguar Land Rover unit turn to profit in the year ended March 31, quit on Sept. 9 after less than two years as the global head of India’s biggest automaker citing “unavoidable personal circumstances.”

Forster’s replacement will face the challenge of reversing six straight months of declining sales at Jaguar as economies in Europe stall. Tata Motors, which last year got 35 percent of its revenue from the U.S. and Europe, needs to find a head for the company soon to avoid derailing a plan to invest $2.4 billion annually in new models and expanding into China, according to Deepesh Rathore, managing director for IHS Automotive.

“They are going to be left wondering who is going to replace him,” said Andrew Jackson, an analyst at research firm Datamonitor in London. “This is a big blow really for Jaguar Land Rover. He signed off on a very bold change in direction for the company.”

Tata Motors’ shares declined 4.3 percent, the most since Aug. 19, to 146.35 rupees at the 3:30 p.m. close in Mumbai. The company’s shares have dropped 44 percent this year, making it the worst performing stock in the BSE India Sensitive Index.

Credit to Management

“The credit for the turnaround of Jaguar Land Rover goes to the management team and workforce of the company,” Ratan Tata, chairman of Tata Motors, said in an e-mailed statement today. “No single person can or should take credit for the improvement in the company’s operations.”

Prakash Telang, managing director of the company’s Indian operations, and Ralf Speth, chief executive officer of Jaguar Land Rover, will represent their respective units on Tata Motors’ board, according to an e-mailed statement on Sept. 9.

Forster presided over a 20-fold jump in Jaguar Land Rover’s profit before tax in the year ended March 31. He also led Tata Motors plan to tap China, Asia’s largest economy.

China is the No. 1 growth market for Jaguar Land Rover, Forster said in a Bloomberg TV interview in May. Tata Motors is looking for a local partner in China to set up assembly operations in the country, and the company has shortlisted manufacturers, Forster said in a separate interview the same month, without naming any of the potential partners.

‘Difficult to Replace’

Forster helped by “pulling Jaguar and Land Rover out of the mud and making them profitable,” said Peter Schmidt, managing director of Warwick, England-based Automotive Industry Data. “It will be very, very difficult to replace him in the short term, and possibly in the long term.”

The Jaguar Land Rover unit, based in Gaydon, England, generated 57 percent of Tata Motors’ revenue for the year ended March 31, up from 53 percent a year earlier.

The division’s pretax profit surged 20-fold to 1.12 billion pounds for the fiscal year. Jaguar aims to challenge Bayerische Motoren Werke AG with a hybrid supercar and an entry-level sedan to compete with the 3-Series.

The new models are part of Tata’s plans to invest 1.5 billion pounds ($2.4 billion) annually in product development at Jaguar and Land Rover over the next five years. The spending will include 40 new vehicles or upgrades, including the Range Rover Evoque, for which the company has begun deliveries.

Concept Cars

Jaguar will unveil its C-X16 concept car at the Frankfurt Motor Show tomorrow, according to the company’s website. The 186 miles (299 kilometers) per hour two-seater sports car is the company’s smallest car in more than fifty years. Land Rover also intends to introduce a new Defender model in 2015 and will show the Land Rover DC100, its concept for a potential successor.

Europe’s debt crisis drove a 23 percent decline in Jaguar sales to 4,372 in July, according to a company statement. Almost 25 percent of Jaguar and Land Rover sales come from the U.K., where the economy grew at the slowest pace in the second quarter since it contracted in the first three months of 2010. North America and Europe account for about 22 percent each of sales, according to a company presentation.

Forster, who was hired in February 2010, will remain as a non-executive member on the company’s board, Mumbai-based Tata Motors said in the statement. The company recruited Forster from General Motors Co. (GM) where he was head of European operations.

Nano Sales

Passenger-vehicle sales at Tata Motors slumped 33 percent in August from a year earlier after India’s central bank raised its benchmark interest rate to 8 percent in July, the highest among Asia’s biggest economies.

Deliveries of the Nano, the world’s cheapest car, plunged 85 percent to 1,202 units in August, Tata Motors said in a statement on Sept. 1. The Society of Indian Automobile Manufacturers said last week it may cut the industry’s sales forecast after economic growth slowed to the lowest in six quarters in the three months ended June.

“I would expect Forster’s position to be filled up in the next two to three months if the company wants to keep their plans on track,” said Rathore.

Tata Motors bought Jaguar Land Rover from Ford Motor Co. in 2008 for $2.5 billion.

To contact the reporters on this story: Siddharth Philip in Mumbai at sphilip3@bloomberg.net; Steven Rothwell in London at srothwell@bloomberg.net

To contact the editor responsible for this story: Kae Inoue at kinoue@bloomberg.net

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Gold Declines as Some Investors Sell to Cover Losses in Equity Markets

By Nicholas Larkin - Sep 12, 2011 7:17 PM GMT+0700

Gold declined in New York as some investors sold the metal to cover losses in equities that dropped on concerns that the European debt crisis is worsening.

European and Asian stocks slumped on speculation German Chancellor Angela Merkel is preparing for a Greek default. The dollar was little changed after earlier today climbing to the highest level in more than six months against six major currencies. Gold touched an all-time high $1,923.70 an ounce on Sept. 6 and today set records priced in euros and Swiss francs.

“The margin clerks will be sharpening their knives today and will take dead aim even upon gold if that is where they think they can find liquidity,” Dennis Gartman, an economist and the editor of the Suffolk, Virginia-based Gartman Letter, said in his daily report. Some investors “will argue that gold will prove valuable and will hold its value even as stock prices plunge, and in the long run they may well be right.”

Gold for December delivery fell $16.70, or 0.9 percent, to $1,842.80 an ounce by 8 a.m. on the Comex in New York. Immediate-delivery gold was 0.9 percent lower at $1,839.68 in London.

Bullion is in the 11th year of a bull market, the longest winning streak since at least 1920 in London, as investors seek to diversify away from equities and some currencies. The metal is up 30 percent this year, outperforming global stocks, commodities and Treasuries.

Germany’s Banks

Officials in Merkel’s government are debating how to shore up German banks in the event that Greece fails to meet the budget-cutting terms of its aid package and is unable to get a bailout-loan payment, three coalition officials said on Sept. 9. Merkel is due to hold talks on the debt crisis with European Commission President Jose Manuel Barroso today.

BNP Paribas SA, Societe Generale SA and Credit Agricole SA, France’s largest banks by market value, may have their credit ratings cut by Moody’s Investors Service as soon as this week because of their Greek holdings, two people with knowledge of the matter said.

“While gold is capable of rallying in the face of a strong dollar, an extended upward move in the dollar does put some obstacles in its path,” Edel Tully, a London-based analyst at UBS AG, wrote in a report. Still, “gold should benefit from the scaling back of risk appetite on what appear to be rising fears of a Greek default, contagion to the rest of the periphery, and the impact on banks.”

Gold exchange-traded-product holdings rose on Sept. 9 for the first time since Aug. 30, gaining 11.8 metric tons to 2,149.8 tons, data compiled by Bloomberg show. Assets reached a record 2,216.8 tons on Aug. 8.

Silver for December delivery in New York slipped 1.5 percent to $40.995 an ounce. Platinum for October delivery was down 1.2 percent at $1,816.10 an ounce. Palladium for December delivery dropped as much as 2.5 percent to $720.15 an ounce, the lowest price since Aug. 9, and was last at $725.05.

To contact the reporters on this story: Nicholas Larkin in London at nlarkin1@bloomberg.net

To contact the editor responsible for this story: Claudia Carpenter at ccarpenter2@bloomberg.net.

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Indonesia’s Stock Market Value to Lure Investors, Panin Says

By Berni Moestafa and Chan Tien Hin - Sep 12, 2011 5:12 PM GMT+0700

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University students touring the Indonesia Stock Exchange walk past stock quotes reflected in a window in Jakarta, Indonesia. The value of Indonesian equities surged 17 percent to $416 billion this year to Sept. 9, surpassing Malaysia’s $407 billion to become the ninth-biggest stock market in Asia. Photographer: Ed Wray/Bloomberg

Indonesian stocks have become more attractive to overseas investors after the world’s fourth-most populous nation overtook Malaysia as Southeast Asia’s second- largest equities market by value, PT Panin Sekuritas said.

“Foreign investments into Indonesian stocks will likely increase as portfolios are weighted in line with the size of a nation’s stock market,” Winston Sual, who helps manage $991 million at Jakarta-based Panin Sekuritas, said in a Sept. 9 interview. The firm’s $407 million Panin Dana Maksima fund has climbed 40 percent in the past year, beating 35 rival funds, according to data compiled by Bloomberg.

The value of Indonesian equities surged 17 percent to $416 billion this year to Sept. 9, surpassing Malaysia’s $407 billion to become the ninth-biggest stock market in Asia. Singapore’s stock market is the biggest in Southeast Asia at $523 billion. The Jakarta Composite index (JCI) has risen 8 percent in 2011 through last week, compared with a 3.3 percent drop in the FTSE Bursa Malaysia KLCI Index.

Foreign investors stepped up buying of Indonesian shares as China and India increased demand for coal and palm oil, benefiting companies such as PT Bumi Resources and plantation owner PT Astra Agro Lestari. Rising incomes have also spurred domestic spending, lifting consumer companies including PT Astra International, the biggest automotive retailer.

“Indonesia’s economy is the largest in Asean and it is resilient because of strong domestic consumption,” Panin’s Sual said, referring to the Association of Southeast Asian Nations.

Faster Growth

The Indonesian economy, the largest in Southeast Asia, will likely expand 6.5 percent this year, the fastest pace since the 1998 Asian financial crisis, President Susilo Bambang Yudhoyono said Aug. 16. That compares with the Malaysian central bank’s estimate for growth of as much as 6 percent.

Indonesia’s stock index dropped 2.6 percent to close at 3,896.12 in Jakarta, its biggest drop since Aug. 19. The Kuala Lumpur benchmark index slid 1.6 percent to 1,446.26, compared with a 1.9 percent fall in the MSCI Emerging Markets Index.

Bank Indonesia kept its benchmark interest rate unchanged on Sept. 8 at 6.75 percent for a seventh month to help support domestic consumption, which accounts for about 56 percent of the economy.

People Factor

Indonesia’s population of 243 million ranks behind only those of China, India and the U.S. By contrast, Malaysia has about 28 million people and Singapore 4.7 million, U.S. Census Bureau data show.

“There will be more investments going into the stock market as people are looking for a growth story,” Lye Thim Loong, who helps manage about $770 million at Libra Invest Bhd. in Kuala Lumpur, said. “We have been very actively investing in Indonesia. You have the population to sustain a domestic consumption story.”

Overseas investors bought a net $1.7 billion of Indonesian shares this year through August, according to data compiled by Bloomberg. Foreign investors sold a net 500 million ringgit ($166 million) of Malaysian stocks this year through August, according to data from the Kuala Lumpur stock exchange and Credit Suisse Group AG.

To contact the reporter on this story: Berni Moestafa in Jakarta at bmoestafa@bloomberg.net; Chan Tien Hin in Kuala Lumpur at thchan@bloomberg.net

To contact the editor responsible for this story: Darren Boey at dboey@bloomberg.net

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Rolex Oysters Face Swiss Franc Crisis With Celebs’ Help

By A. Craig Copetas - Sep 12, 2011 5:32 PM GMT+0700

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Rolex director Jean-Noel Bioul sits on the terrace of the Geneva Golf Club during the Rolex Trophy European Challenge Tour. Photographer: A. Craig Copetas/Bloomberg

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Eight-time Le Mans winner and Rolex "Testimony" Tom Kristensen celebrates a birdie putt on the 15th green at the 2011 Rolex European Challenge Tour at the Geneva Golf Club. Photographer: A. Craig Copetas/Bloomberg

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Pablo Picasso models a native American bonnet on his head and a Rolex GMT Master on his wrist. Source: Rolex Blog via Bloomberg

Along an Alpine fairway veiled between the private banks of Geneva and the lakefront estates of their jumpy Swiss depositors, Jean-Noel Bioul taps his wrist and offers clients the ultimate in luxury shielding for perilous economic times.

The product costs around $7,000 and current investors include guitarist Eric Clapton and actor Daniel Craig. It was developed in 1956 with the help of physicists at the nearby European Organization for Nuclear Research, site of CERN’s Hadron Collider. The item weighs 157 grams and is guaranteed to tell the correct time during thermonuclear incidents that release up to 1,000 Gauss of magnetic field density.

“The Milgauss is the one model that comes with a lightning bolt as the second hand,” says Bioul, the 57-year-old international sponsorship director of the Geneva-based watchmaker Rolex Group. It’s the only maker of timepieces that also can supply an unscripted photograph of Pablo Picasso wearing an American Indian war bonnet on his head and a Rolex Oyster Perpetual Chronometer on his wrist.

Luxury watchmakers are specialists at concocting marketing campaigns to explain why their brand can take a licking and keep on ticking. Yet closely held Rolex doesn’t disclose its financial details let alone tell how a GMT-Master -- strapped to the wrist of Che Guevara in 1956 -- sailed into Cuba with Fidel Castro aboard the yacht Granma and was used to time guerilla activities. Select Rolex owners, though, play a key role in the company’s classy branding strategy.

Swiss Bank

“We have the reputation of operating like a Swiss bank,” Bioul chuckles on a patio at the Geneva Golf Club’s Rolex Trophy-Challenge Tour, an annual event since 1991. “That’s changing, slowly.”

Rolex annually makes 700,000 watches, Bioul says. Growth markets in China and India helped cushion the company against the Swiss franc’s overvaluation against the euro during this summer’s currency crisis, he says. A Goldman Sachs Group Inc. (GS) report in August slashed Swiss growth forecasts for next year to 0.6 percent from 2 percent. On Sept. 7, the Swiss National Bank decided to cap the franc’s rate to protect trade.

“We’re still doing well in Europe and North America, even in a global economy that’s difficult,” says Bioul, who joined Rolex in 1993 after helping manageMark McCormack’s London-based sports marketing company International Management Group. “Rolex has never been pressured by time, but we pride ourselves on being able to change with the times to ensure growth in a dignified manner.”

Scraps of Paper

Central to that philosophy, set down by Rolex co-founder Hans Wilsdorf, are some 102 years of Rolex chronicles kept in the company’s archives. Bioul says these scraps of paper, photographs and statements on the reliability and enduring fashion of a Rolex watch are the institutional backbone of the company’s continuing financial success under Chief Executive Officer Gian Riccardo Marini, who in May succeeded Bruno Meier as head of the biggest luxury-watch brand.

The characters in these stories who capture Rolex’s imagination are singularly called “Testimony,” a grammatically clumsy proper noun that refers to individuals or organizations (such as tennis star Roger Federer, tenor Placido Domingo and the Royal & Ancient Golf Club of St. Andrews) tapped to contractually star in ad campaigns.

The first thing Bioul does when he spots someone wearing a Rolex is to ask them to recount the story of the watch.

Rolex Family

“Every Rolex owner has a personally passionate story to tell about their watch and everyone who wears a Rolex is immediately looked upon as an investor and a member of the Rolex family,” Bioul says. “They’re our representatives and we want to know about them.”

Elevation to Testimony status is rigorous. “Virtually all Testimonies already wear a Rolex,” Bioul says. “We listen and then fact-check the story behind them and their watch. Do the story and individual meet the dignity of the brand? If so, we offer Testimony. It’s not about money. You don’t become rich with a Rolex watch deal.”

Testimonies usually receive a three-year contract valued at around 35,000 Swiss francs ($39,561) and 30,000 Swiss francs worth of Rolex watches over the duration of the agreement, according to a former Testimony who asked to remain anonymous because the parties to the negotiation had promised to keep details confidential.

“You’ll never find a baloney story at Rolex,” Bioul says. “A Testimony must already be in love with the watch and its capabilities. If they’re in it for the money we’re not interested.”

Channel Swimmer

Although Rolex’s first official Testimonies were 1960s sports superstars Arnold Palmer, Jackie Stewart and Jean-Claude Killy, Bioul says Wilsdorf started the program in 1927, when he asked Mercedes Gleitze to wear a Rolex during her swim of the English Channel to show a skeptical public that the Oyster case was rugged and waterproof.

“That was the beginning of Testimony,” says Bioul, who today manages a stable of 120 Testimonies in categories that include golf, yachting, tennis, equestrian, exploration, auto racing, the arts and an eight-man and -woman scuba team who last year explored life in the minus-50-degree waters under the North Pole wearing Sea-Dweller DEEPSEA watches.

“We keep our eyes open, we quietly look for achievements of discovery, human qualities, regardless of how famous or as of yet accomplished the individual,” Bioul says.

Executive's Challenge

Back in the mid-1970s, for instance, Rolex’s then Chief Executive Officer Patrick Heiniger was at a golf tournament when he spotted a despondent young man who failed to make the cut. “Heiniger took him aside and said, ‘let’s go out and play the back nine. If you can beat me, I want you to represent Rolex,’” Bioul says.

The kid whipped Heiniger and became a Testimony. His name was Seve Ballesteros.

In the often balmy world of product placement, Barry Hyde, 45, is an authority on the etiquette of pitching pricey aspirational goods. He’s chief marketing officer for the United States Golf Association in Far Hills, New Jersey. His job is to ensure professional golf doesn’t become entangled with underwriters who might tarnish the USGA’s reputation.

“Golf, tennis, even the arts have a culture ripe to be exploited by sponsors,” is Hyde’s verdict. “This happens all the time but never with Rolex. I might not know much about the fine arts, but if I see a Rolex ad about an artist I’m going to read it because I know the person will be compelling.”

Racing Daytona

Tom Kristensen is Testimony even though he didn’t wear his Rolex Daytona race watch during the eight first-place finishes at the wheel of an Audi in the 24 Hours of Le Mans.

“The Daytona does nothing in the cockpit of a modern race car,” Kristensen, 44, says. “All the analog information the watch supplies is digitally transmitted to the car by computer. Yet the Daytona is useful when I drive AC Cobras and other classic racers at competitive events like Goodwood.”

Kristensen says Rolex values the protocols of his risky culture. “Traditional sponsors are not like that,” says the Testimony Rolex describes as “the man who can’t slow down.”

“There’s no obligation for me to attend any Rolex event,” Kristensen says after sinking a birdie putt. “But I do because Rolex family members and Testimonies are fascinating people to meet.”

Over at the clubhouse, Bioul remains on the prowl. He spots a writer wearing a vintage 1975 GMT-Master. There’s another story to tell back at the office.

Information: http://www.rolex.com http://usga.com http://www.deepseaunderthepolenews.com/videos.asp

To contact the writer on the story: A. Craig Copetas in Paris at ccopetas@bloomberg.net or @ACraigInParis

To contact the editor responsible for this story: Mark Beech at mbeech@bloomberg.net.

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Oil Drops for Third Day on Concern Debt Crisis to Limit Growth, Fuel Need

By Grant Smith and Ben Sharples - Sep 12, 2011 7:10 PM GMT+0700

Oil fell for a third day in New York, the longest losing streak in a month, as investors bet that Europe’s debt crisis will limit economic growth. Production resumed in the Gulf of Mexico as the threat of storms eased.

West Texas Intermediate crude slid as much as 2.6 percent while equities tumbled and the euro slumped on growing speculation that Germany is preparing for a Greek debt default. Nate, a storm over eastern Mexico, weakened as it moved further inland, the U.S. National Hurricane Center said. The oversupply of oil may disappear as the market absorbs the release of stockpiles, Goldman Sachs Group Inc. said. OPEC said Libya will be able to restore most oil production within six months.

“The debt crisis in Europe is leading to fear about economic growth,” said Hannes Loacker, an analyst at Raiffeisen Bank International AG in Vienna and the fifth most-accurate forecast of Brent prices in the eight quarters to June. “If sentiment in the equity markets remains bad, it will be tough for oil to move higher.”

Crude for October delivery fell as much as $2.24 to $85 a barrel in electronic trading on the New York Mercantile Exchange and was at $86.08 at 12:36 p.m. London time. The contract slipped $1.81 to $87.24 on Sept. 9. Prices are 11 percent higher than a year ago.

Brent oil for October settlement decreased $1.72, or 1.5 percent, to $111.05 a barrel on the London-based ICE Futures Europe Exchange. The European benchmark contract was at a premium of $24.88 to U.S. futures, compared with the record close of $26.87 on Sept. 6.

Gulf of Mexico

The euro fell to its lowest level since 2001 against the yen and slid versus the dollar. Speculation that German Chancellor Angela Merkel is preparing for a Greek default curbed demand for the shared currency, limiting investor demand for dollar-denominated oil futures as a hedge.

About 6.2 percent of oil production and 4 percent of natural gas output from the Gulf of Mexico are still shut after Lee battered the area, a Bureau of Ocean Energy Management, a Regulation and Enforcement report showed Sept. 9. Nate, downgraded to a post-tropical cyclone, was about 75 miles (120 kilometers) southwest of Tuxpan, Mexico, the U.S. National Hurricane Center said in an advisory before 10 p.m. Mexico City time yesterday.

Bullish Bets

Hedge funds cut bullish bets on oil last week while increasing those on gasoline. The funds and other large speculators reduced wagers that prices will rise, with the number of futures and options combined falling by 5,780, or 3.6 percent, to 155,837, according to the Commodity Futures Trading Commission’s Commitments of Traders report. Bets motor fuel will rally increased by 13 percent, the data showed.

“The idea that European and U.S. economic growth is going to be weak over the next year seems like a reasonable forecast,” said John Vautrain, a senior vice president at Purvin & Gertz Inc. in Singapore. “WTI will stay enormously depressed, $10 to $20 a barrel or more below Brent.”

In London, money managers raised bullish bets on Brent crude by 12 percent in the week ended Sept. 6, according to data from ICE Futures Europe.

Speculative bets that prices will rise, in futures and options combined, outnumbered short positions by 72,455 contracts, the London-based exchange said today in its weekly Commitment of Traders report. Net-long positions rose by 8,024 contracts, from 64,431 a week earlier.

Libya Output

Libya will be able to restore most of the oil production halted during fighting against Muammar Qaddafi in six months, and resume full capacity in 18 months, according to the Organization of Petroleum Exporting Countries. OPEC “marginally” lowered estimates for global oil consumption in 2012, and trimmed its 2011 assessment by 150,000 barrels a day, in a monthly report today.

Still, oil markets are likely to tighten in the remainder of the year and into 2012 as the market absorbs additional supplies from the release of strategic stockpiles in the U.S., Goldman Sachs Group said in a research note e-mailed today.

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

To contact the editor responsible for this story: Stephen Voss on sev@bloomberg.net

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Oil Tanker Sailing for Libya’s Mellitah as First Cargo From West Offered

By Alaric Nightingale and Michelle Wiese Bockmann - Sep 12, 2011 3:38 PM GMT+0700

An engineer stands in the grounds of the Zawiya oil refinery near Tripoli on Aug. 29, 2011. Photographer: Shawn Baldwin/Bloomberg

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An engineer monitors equipment inside the control room at the Zawiya oil refinery near Tripoli on Aug. 29, 2011. Photographer: Shawn Baldwin/Bloomberg

An oil tanker is sailing to the Libyan port of Mellitah, a sign the nation may be resuming energy exports after months of fighting that led to the ouster of Muammar Qaddafi, ship-tracking data show.

The Newlead Avra, capable of hauling about 540,000 barrels, signaled earlier today about 30 miles from the Libyan coast, the data compiled by Bloomberg show. The 229-meter (750-foot) vessel is 7.9 meters deep in the water, compared with a maximum draft of 14.45 meters when fully loaded. It can carry crude or refined-oil products, according to Bureau Veritas Group, which monitors ships’ compliance with laws on seaworthiness.

Libya wants to resume crude exports in two to three weeks, Guma El-Gamaty, the U.K. coordinator for the country’s National Transitional Council, said Sept. 8. Shipments from the country, holder of Africa’s biggest oil reserves, plunged during a conflict that escalated in February and led to leader Qaddafi being deposed.

An 80,000 metric-ton cargo of crude was being offered for shipment from Mellitah last week, three people with direct knowledge of the transaction said Sept. 8. The loading is likely the first from the nation’s west since March, said Thomas Zwick, an Oslo-based analyst at Lorentzen & Stemoco AS, a consultant to the shipping industry.

Commercial Officer

The Newlead Avra is on a 12-month charter to Vitol Group and currently has no cargo onboard, according to Sozon Alifragis, the chief commercial officer of Newlead Holdings Ltd., which owns the vessel. A spokesman for Vitol declined to comment.

Libyan crude output slumped to 60,000 barrels a day in July from 1.7 million barrels in January, according to the Paris- based International Energy Agency, which advises 28 industrialized nations.

Operations resumed about two weeks ago at the 120,000 barrel-a-day Zawiyah refinery near the Libyan capital of Tripoli, El-Gamaty said. The plant is processing 30,000 barrels a day and will reach full capacity in six to eight weeks, he said. The crude-export facility in the eastern port city of Tobruk is undamaged, he said.

Libyan crude output increased to as much as 1.87 million barrels a day in 2008 from 1.38 million barrels in 2002, according to U.S. Energy Department data.

To contact the reporter on this story: Alaric Nightingale in London at anightingal1@bloomberg.net; Michelle Wiese Bockmann in London at mwiesebockma@bloomberg.net.

To contact the editor responsible for this story: Stuart Wallace at swallace6@bloomberg.net

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ANC Mulls Law to Supersede Mining Contracts, Godongwana Says

By Franz Wild and Nasreen Seria - Sep 12, 2011 5:39 PM GMT+0700

South Africa’s national needs should take precedence over mining companies’ desire to export and a law to overrule mine contracts may be considered, the head of the ruling party’s task team formed to study a proposal to nationalize mines said.

The country’s coal, iron ore and other mineral reserves should benefit the continent’s biggest economy, the African National Congress’s Enoch Godongwana said in an interview in Johannesburg on Sept. 8.

South Africa’s policies should be guided by “to what extent we can utilize our resources to achieve a number of goals, among them growth and redistribution,” Godongwana, 54, said. “Legislation that supersedes any contract you have” to ensure the assets meet the country’s needs is an option, he said. “In certain circumstances, national interest must prevail.”

Citigroup Inc. last year valued the country’s mineral resources at $2.5 trillion, the most of any nation. Leaders of companies including AngloGold Ashanti Ltd. (ANG), Africa’s biggest gold producer, and Standard Bank Group, the continent’s largest lender, have said nationalizing mines will curb growth and hinder job creation in a country where one in four is unemployed.

South Africa has the world’s largest reserves of platinum, 30 percent of the world’s gold and supplies coal to Indian and European power stations. Anglo American Plc (AAL), Rio Tinto Group and BHP Billiton Ltd. (BHP) have assets in the country, which is also home to two of the world’s four biggest gold miners and the two largest platinum producers.

‘Insulting the Intelligence’

The ANC’s Youth League and the Congress of South African Trade Unions, the country’s largest labor grouping and a party ally, say that the ANC will adopt nationalization as a policy at its national conference next year, and is only looking into the details of how best to do it. The study was agreed to after repeated demands by the youth wing, which is led by the 30-year old Julius Malema.

“If there are some people who say we’re going to nationalize and we’re just looking at the modalities, I’d suggest that that person is insulting the intelligence of ANC delegates,” said Godongwana, who opposes state control of industry. “I don’t believe we should take on managing more than we can.”

November Report

As a motivation for such a law Godongwana, who is also the country’s deputy minister of economic development, cited the example of a coal mine that lies next to a state-owned power plant yet focuses on exports while the fuel needed to generate electricity is brought in from another mine. He also criticized the level of South African steel prices even though the country has abundant deposits of iron ore.

The ANC will in November publish a report on findings by an independent task team that is examining models of nationalization or increased state participation in mining around the world, he said. Those findings, based on visits by the team to countries including Chile and Botswana, will be made available for public comment.

With a jobless rate of 25.7 percent, South Africa’s government is aiming at the 7 percent annual economic growth that it says it needs to create 5 million jobs by 2020. The economy expanded 1.3 percent in the second quarter, its slowest pace in two years, according to the Pretoria-based national statistics office.

Government companies already run a coal mine and a diamond operation, while the Public Investment Corp., which manages pension funds for state workers, and Industrial Development Corp. hold stakes in mining companies.

Investor Concern

Kumba Iron Ore Ltd. (KIO), which owns the country’s largest iron- ore mine, is 17 percent held by the two state-owned companies and coal producer Exxaro Resources Ltd. (EXX) is 5.3 percent held by the PIC, according to data compiled by Bloomberg.

The ANC Youth League’s campaign to wrest mine ownership from what it calls a white capitalist elite, has caused “an uneasiness from investors particularly from outside South Africa” who don’t understand that the discussion is at a party rather than government level, Godongwana said. Sixty-six percent of South African lawmakers are representatives of the ANC.

“While its being debated all the investment is on hold and thats not helping anybody,” Peter Major, head of Cadiz Corporate Solutions’ mining and resources unit, said in in an interview from Cape Town today. “Nobody is putting new money into anything here. We have foreign investment but they are buying our bonds and our shares but bricks and mortar is very negligible. It’s not really creating jobs.”

Urgency, Inequality

Still, the youth league has raised issues that South African society needs to tackle, Godongwana said.

“One thing positive is that it’s introduced a sense of urgency on some of the social ills engulfing our society,” referring to the Youth League’s lobbying.

South Africa’s Gini coefficient, a measure of income inequality, is 0.68, according to the South African Treasury, one of the highest in the world and higher than in 1994, when the country held its first all-race elections and ended the apartheid system of institutionalized racial discrimination. A reading of zero means complete equality, while a reading of one means complete inequality.

To contact the reporters on this story: Franz Wild in Johannesburg at fwild@bloomberg.net; Nasreen Seria in Johannesburg at nseria@bloomberg.net

To contact the editor responsible for this story: Andrew J. Barden at barden@bloomberg.net

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Tropical Storm Nate Downgraded Over Mexico as Maria Moves From Caribbean

By Ann Koh and Lananh Nguyen - Sep 12, 2011 7:07 PM GMT+0700

Nate weakened as the storm moved over Mexico with heavy rains and has been downgraded to a post- tropical system, the U.S. National Hurricane Center said.

Seven oil rig workers were found alive in a lifeboat in the Gulf of Mexico while two died and one remains missing, Petroleos Mexicanos said.

The remnants of Nate were about 75 miles (120 kilometers) west-southwest of Tuxpan, Mexico, with maximum winds of 30 mph, the NHC said in its final advisory for the storm.

The Mexican Navy found seven of the 10 missing oil rig workers and transferred them by helicopter to Carmen City, Pemex said in a statement. In a conflicting report, Heliservicio De Campeche, an airlifting contractor, said 10 workers were found alive.

Tropical Storm Maria moved further from the northeastern Caribbean with 60 mph winds and was 165 miles north of Puerto Rico, the center said today in a separate advisory. The storm was headed northwest at 9 mph.

A gradual turn toward the north is expected the next couple days, the NHC said. “The center of Maria will continue moving away from the islands of the northeastern Caribbean and pass well east of the southeastern Bahamas.”

To contact the reporters on this story: Ann Koh in Singapore at akoh15@bloomberg.net; Lananh Nguyen in London at lnguyen35@bloomberg.net

To contact the editor responsible for this story: Alexander Kwiatkowski at akwiatkowsk2@bloomberg.net

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AOL Said to Discuss Deal With Yahoo Advisers

By Brett Pulley and Douglas MacMillan - Sep 10, 2011 3:47 AM GMT+0700

AOL Inc. signage is displayed outside the company's headquarters building in New York. Photographer: Jin Lee/Bloomberg

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Sept. 9 (Bloomberg) -- Paul Kedrosky, author of the Infectious Greed blog and a Bloomberg contributing editor, talks about the possibility of a merger between AOL Inc. and Yahoo! Inc. AOL Chief Executive Officer Tim Armstrong is talking with advisers to Yahoo to gauge its interest combining the companies, according to two people familiar with the matter. Kedrosky speaks with Emily Chang and Cory Johnson on Bloomberg Television's "Bloomberg West." (Source: Bloomberg)

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Sept. 8 (Bloomberg) -- Jordan Rohan, an analyst at Stifel Nicolaus & Co., talks about the outlook for Yahoo! Inc. Rohan speaks with Betty Liu and Jon Erlichman on Bloomberg Television's "In the Loop." (Source: Bloomberg)

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Tim Armstrong, chief executive officer of AOL Inc. Photographer: Brendan Smialowski/Bloomberg

AOL Inc. (AOL) Chief Executive Officer Tim Armstrong is talking with advisers to Yahoo! Inc. to gauge its interest in combining the companies after the ouster of CEO Carol Bartz, according to two people familiar with the matter.

Armstrong is discussing options for a combination aimed at strengthening the two Internet companies, said the people, who wouldn’t be identified because the talks aren’t public. He has talked with private equity firms and investment bankers from Allen & Co. working with Yahoo, one person said.

Armstrong had been interested in a merger with Yahoo last year and was rebuffed while Bartz was at the helm, one person said. Her departure prompted him to reconsider the option, and, under one scenario now being considered, Yahoo would acquire AOL and Armstrong would become CEO of the combined company, the person said.

Yahoo is unlikely to be interested in a deal for AOL at this time given the company’s losses and declining revenue, according to one person familiar with the matter. AOL’s market value is about $1.6 billion, while Yahoo’s is about $18.2 billion.

Graham James, a spokesman for AOL, and Kim Rubey, spokeswoman for Yahoo, declined to comment.

AOL and Yahoo have been struggling to compete against Internet companies such as Google Inc. (GOOG) and Facebook Inc. AOL has lost almost $800 million since it was spun off from Time Warner Inc. (TWX) in 2009. The Internet pioneer has struggled to make money from online advertising as its profitable dial-up Internet access business declines. AOL is also using Allen & Co. to consider its strategic options.

Yahoo’s Decline

Yahoo, the most-visited U.S. Web portal, fired Bartz on Sept. 6, after less than three years as CEO. Once an $80 billion company, Yahoo has fallen more than 80 percent as it lost Internet users and advertising revenue to Google and Facebook. Bartz was hired after Yahoo rejected a $47.5 billion offer from Microsoft Corp. (MSFT) in 2008.

Yahoo has been working with Allen & Co. and UBS AG for some time, according to Charles Sipkins, a spokesman for Yahoo’s board.

AOL, based in New York, fell 82 cents, or 5.3 percent, to $14.72 at 4 p.m. on New York Stock Exchange. Sunnyvale, California-based Yahoo rose 4 cents to $14.48 on the Nasdaq Stock Market.

To contact the reporters on this story: Brett Pulley in New York at bpulley@bloomberg.net; Douglas MacMillan in San Francisco at Dmacmillan3@bloomberg.net

To contact the editors responsible for this story: Tom Giles at tgiles5@bloomberg.net; Peter Elstrom at pelstrom@bloomberg.net

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Greece Dismisses Default ‘Rumors,’ Says Country Committed to Bailout Pact

By Marcus Bensasson - Sep 10, 2011 1:14 AM GMT+0700

The main headquarters of the Greek Finance Ministry sit in Athens. Photographer: Kostas Tsironis/Bloomberg

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Sept. 9 (Bloomberg) -- Vincent Truglia, managing director at Granite Springs Asset Management, talks about the likelihood of a possible default on Greek sovereign debt. Finance Minister Evangelos Venizelos dismissed “rumors” of a Greek default, saying the nation is committed to “full implementation” of the terms of a July agreement for a second aid package. Truglia speaks with Lisa Murphy on Bloomberg Television's "Fast Forward." (Source: Bloomberg)

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Sept. 9 (Bloomberg) -- Axel Merk, president and chief investment officer of Merk Investments LLC, talks about his decision to sell the euro. Merk also discusses Greece's sovereign debt crisis. He speaks with Matt Miller, Carol Massar and Peter Cook on Bloomberg Television's "Street Smart." (Source: Bloomberg)

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Sept. 9 (Bloomberg) -- German lawmaker Otto Fricke, the budget spokesman for Chancellor Angela Merkel's Free Democratic Party coalition partner, talks about political solutions to the Greek debt crisis. He speaks from Berlin with Owen Thomas on Bloomberg Television's "Countdown." (Source: Bloomberg)

Finance Minister Evangelos Venizelos dismissed “rumors” of a Greek default, saying the nation is committed to “full implementation” of the terms of a July agreement for a second aid package.

“This isn’t the first time that this organized wave of rumors over Greece’s default has appeared,” Venizelos said in an e-mailed statement today. “This is a game that’s in bad taste, organized speculation that is directed against the euro region and the euro as a whole.”

Stocks sank and the euro slid to a six-month low against the dollar today as three German officials said that Chancellor Angela Merkel’s government is preparing plans to shore up banks should Greece default. Investors are concerned that Greece isn’t implementing austerity moves fast enough to get a sixth payment from last year’s 110 billion-euro ($151 billion) bailout.

Greece committed is to the “full implementation” of the decisions of a July 21 summit for a second aid package worth 159 billion euros, as well as “its obligations arising from its agreements with its institutional partners,” Venizelos said.

Greece this week pledged to accelerate measures pledged in return for international financing, with EU and International Monetary Fund officials due to return to Athens next week to resume a suspended review of the country’s fiscal performance.

Responses from banks invited to participate in a 50 billion-euro debt swap program that forms part of the July 21 agreement have been “very positive,” Petros Christodoulou, head of the country’s debt management office, said in a telephone interview today. The government is looking for financial institutions holding 90 percent of Greek government debt expiring up to 2014 to take part in the program.

To contact the reporter on this story: Marcus Bensasson in Athens at mbensasson@bloomberg.net.

To contact the editor responsible for this story: Craig Stirling at cstirling1@bloomberg.net.

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Copper Tumbles Most in a Month as Obama, Bernanke Fail to Boost Confidence

By Yi Tian and Agnieszka Troszkiewicz - Sep 10, 2011 1:04 AM GMT+0700

Copper tumbled the most in a month as President Barack Obama and Federal Reserve Chairman Ben S. Bernanke failed to boost investor confidence in the economy.

Global equities dropped as Bernanke stopped short of detailing new plans to boost growth in the world’s largest economy in a speech yesterday, making no reference to further asset purchases by the central bank. Obama called on Congress to pass a plan that would inject $447 billion into the economy. The U.S. is the world’s biggest copper consumer after China.

“Obama’s plan is just not convincing enough,” Matthew Zeman, a strategist at Kingsview Financial in Chicago, said in a telephone interview. “Bernanke also disappointed investors. A lot of risk assets are lower. We will have more downside in the copper market.”

Copper futures for December delivery declined 14.1 cents, or 3.4 percent, to close at $4.0025 a pound at 1 p.m. on the Comex in New York, the biggest loss since Aug. 8. The metal slumped 3 percent for the week, the first decline in three weeks.

“There is residual disappointment in the market that QE3 has not been announced,” Stephen Briggs, an analyst at BNP Paribas SA in London, said by telephone today, referring to a third round of so-called quantitative easing. The “Obama job proposal was not earth-shattering, so perhaps slight disappointment there.”

On the London Metal Exchange, copper for delivery in three months dropped $294, or 3.2 percent, to $8,821 a metric ton ($4 a pound).

Aluminum, nickel, zinc, tin and lead also fell.

To contact the reporters on this story: Yi Tian in New York at ytian8@bloomberg.net; Agnieszka Troszkiewicz in London at atroszkiewic@bloomberg.net

To contact the editor responsible for this story: Steve Stroth at sstroth@bloomberg.net

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Gold Futures Rally as World Economy, Debt Concerns Spur Demand for a Haven

By Debarati Roy - Sep 10, 2011 1:55 AM GMT+0700

Gold futures rose for the second straight day in New York as renewed concern that the Greek debt crisis will worsen and signs of a slowing global economy spurred demand for the metal as a store of value.

The MSCI All-Country World Index fell as much as 3.1 percent, and the Standard & Poor’s 500 Index slipped 3.1 percent after German Chancellor Angela Merkel’s government said it is preparing plans to shore up banks in the event that Greece fails to meet the terms of its aid package and defaults. President Barack Obama yesterday proposed a $447 billion plan to create jobs and boost the U.S. economy.

“The Greece problem is huge, and people also are skeptical about how much of Obama’s plan will be translated into action,” Frank Lesh, a trader at FuturePath Trading, said in a telephone interview from Chicago. “Equities are tumbling, and the flight to safety has begun.”

Gold futures for December delivery gained $2, or 0.1 percent, to settle at $1,859.50 an ounce at 1:49 p.m. on the Comex in New York. This week, the price fell 0.9 percent after the metal surged to a record $1,923.70 on Sept. 6. After today’s close, the metal slid to $1,847.30 in electronic trading.

Budget-Cutting Plans

Obama, speaking before a joint session of Congress, demanded six times that lawmakers act “right away” on a plan that would boost spending on infrastructure, stem teacher layoffs and cut in half the payroll taxes paid by workers and small business owners. Federal Reserve Chairman Ben S. Bernanke said policy makers will discuss the tools they may need to use to aid the recovery at their meeting this month.

Canadian Finance Minister Jim Flaherty said Greece may have to leave the euro if it fails to press ahead with its budget- cutting plans.

Gold is in the 11th year of a bull market, the longest winning streak since at least 1920 in London, as investors seek to diversify away from equities and some currencies. The metal has rallied 31 percent this year, outperforming global stocks, commodities and Treasuries.

Yesterday, CME Group Inc., the parent company of the Comex, raised the margin requirement for the Cleared OTC London Gold Forwards contract to $9,450 per contract, the same level as that for New York gold futures. The OCT contract had no trading volume or open interest, according to data on the CME website.

Silver futures for December delivery fell 90.6 cents, or 2.1 percent, to settle at $41.624 an ounce on the Comex. The price slid 3.4 percent this week, narrowing this year’s gain to 35 percent.

On the New York Mercantile Exchange, platinum futures for October delivery declined $16.60, or 0.9 percent, to $1,837.90 an ounce. Palladium futures for December delivery retreated $26.70, or 3.5 percent, to $738.60 an ounce.

To contact the reporter on this story: Debarati Roy in Mumbai at droy5@bloomberg.net

To contact the editor responsible for this story: Steve Stroth at sstroth@bloomberg.net

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Asian Currencies Decline on U.S. Economic Recovery, European Debt Concern

By Lilian Karunungan - Sep 10, 2011 5:36 AM GMT+0700

Asian currencies fell this week, led by slides in the Singapore dollar and India’s rupee, as a faltering U.S. recovery and Europe’s debt crisis prompted investors to favor safer bets than emerging-market assets.

The Bloomberg-JPMorgan Asia Dollar Index had its biggest weekly loss this year after global funds pulled $2.3 billion from shares in South Korea and Taiwan in the first four days of the week. Central banks in Korea, Indonesia, the Philippines and Malaysia held off from raising interest rates at policy reviews on Sept. 8 after the U.S. reported zero jobs growth for August. The European Central Bank also left borrowing costs unchanged and cut its growth forecasts for the region.

“The ECB seems to be quite worried about the slowdown in economic activity in Europe and that is casting a pall on risk sentiment globally,” said Nick Verdi, a Singapore-based currency strategist at Barclays Capital. “The U.S. labor market is very weak. Market participants were trying to weigh up whether the Fed will enact further monetary stimulus.”

The Singapore dollar fell 1.7 percent this week to S$1.2244 against its U.S. counterpart, according to data compiled by Bloomberg. The rupee weakened 1.7 percent to 46.5650, South Korea’s won dropped 2 percent to 1,084.10 and Malaysia’s ringgit declined 1.5 percent to 3.0095.

The Asia Dollar Index, which tracks the region’s 10 most- active currencies excluding the yen, dropped 0.99 percent in the past five days, the most since the week ended Nov. 26.

U.S., Europe

Concern the U.S. economy will slip into a recession prompted President Barack Obama to unveil a $447 billion plan to Congress on Sept. 8 to create jobs through tax cuts and infrastructure spending. The ECB cut its 2011 growth forecast on Sept. 8 to 1.6 percent, from 1.9 percent, and its projection for 2012 to 1.3 percent from 1.7 percent.

Finance ministers from the Group of Seven nations, meeting yesterday in Marseille, France, said concerns about the future of a global economic recovery highlight the need for policy makers to support growth. They agreed to “take all necessary actions to ensure the resilience of banking systems and financial markets.”

The ECB, the Bank of Japan and the Federal Reserve may implement coordinated monetary-policy easing to tackle weak growth, Morgan Stanley economists wrote in a Sept. 7 note to investors. Fed Chairman Ben S. Bernanke refrained from signaling plans for further stimulus in a speech on Sept. 8 in Minneapolis.

“Speeches made by Bernanke and Obama were in line with expectations, and not enough to surprise the market,” said Kim Sung Soon, a Seoul-based senior currency trader at the Industrial Bank of Korea. “The lingering uncertainty in global financial markets is putting downward pressure on the won.”

‘External’ Risks

South Korean President Lee Myung Bak said Sept. 8 that inflation may exceed the 4 percent target this year, adding it’s hard to find ways to curb consumer-price gains. The Bank of Korea kept the benchmark interest rate unchanged at 3.25 percent for a third month on Sept. 8 and said it may not be able to increase borrowing costs until “external” factors such as Europe’s debt crisis are under control.

The ringgit had its biggest weekly loss in a month after government data showed that Malaysia’s export growth moderated to 7.1 percent in July from 9.6 percent the previous month.

“Prolonged uncertainties in the financial markets, weakness in the labor market and the prevailing fiscal conditions in the advanced economies have heightened the downside risks and fragility of the global economy,” Bank Negara said in its policy statement on Sept. 8. “In the domestic economy, recent indicators point to slower growth in external demand.”

Export Slump

Taiwan’s dollar completed its biggest weekly decline since February, sliding 0.9 percent to NT$29.265 versus the greenback. The island’s overseas sales rose 7.2 percent in August from a year earlier, the least since they last declined in October 2009, the Ministry of Finance reported this week. Economists expected a 15.5 percent increase, a Bloomberg survey showed.

Elsewhere, the Philippine peso declined 0.7 percent to 42.438 per dollar and Thailand’s baht fell 0.5 percent to 30.07. China’s yuan lost 0.09 percent to 6.3882, while Indonesia’s dropped 0.8 percent to 8,588 from Aug. 26. Financial markets in Southeast Asia’s biggest economy were shut for a holiday in the week ended Sept. 2.

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

To contact the editor responsible for this story: Sandy Hendry at shendry@bloomberg.net

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European Stocks Drop for First Week in Three as Banks Sink on Debt Concern

By Alexis Xydias - Sep 10, 2011 6:00 AM GMT+0700

European stocks fell for the first week in three amid concern policy makers won’t be able to stop the region’s sovereign debt crisis from growing and damaging the economic recovery.

Societe Generale SA and Banco Comercial Portugues SA (BCP) led a measure of European bank shares to the lowest since March 2009. Royal Bank of Scotland Group Plc (RBS) and Barclays Plc (BARC) each sank 13 percent as 17 lenders were sued by the U.S. over the sale of mortgage-backed securities and interbank lending rates climbed.

The Stoxx Europe 600 Index dropped 3.7 percent to 224.59 this past week as 18 of 19 industry groups declined. The gauge has plunged 23 percent since this year’s peak on Feb. 17 as economic data from the U.S. and Europe trailed forecasts and Standard & Poor’s downgraded America’s AAA sovereign-debt rating, citing political failure to reduce record deficits. The index is trading at 9.4 times the estimated earnings of its constituent companies, near the lowest valuation since March 2009, according to data compiled by Bloomberg.

There has been “a whirlwind of sovereign downgrades, collapsing economic data and stumbling politics across developed markets” in recent weeks, said Tim Price, chief investment director at PFP Group LLP in London. “Unsurprisingly, markets have suffered. We have gone from a consensus of muted recovery to one of possible double dip.”

Swiss Stocks Gain

National benchmark indexes fell in all of the 18 western European markets except Switzerland, where the Swiss National Bank intervened to weaken the franc. France’s CAC 40 declined 5.5 percent, the U.K.’s FTSE 100 slid 1.5 percent and Germany’s DAX plunged 6.3 percent. The Swiss Market Index (SMI) gained 1.3 percent, a third straight weekly advance.

The VStoxx Index (V2X), which measures the cost of protecting against a decline in shares on the Euro Stoxx 50 Index, climbed 24 percent, the biggest gain in a month.

The Stoxx 600 tumbled 4.1 percent on Sept. 5 after German Chancellor Angela Merkel’s party suffered its fifth election loss this year as she faced criticism over the handling of the debt crisis.

European Central Bank President Jean-Claude Trichet on Sept. 8 said threats to the euro region have worsened and inflation risks have eased. Planned rescue loans to Greece have been put in doubt as countries including Finland demand the country provide collateral in exchange for the funds.

Default Insurance

The cost of insuring against default on European financial companies rose to a record this week as the ECB comments added to concern lenders are finding it harder to access funding markets. Credit-default swaps on Greek government debt surged to an all-time high, signaling a 91 percent chance the nation will fail to meet debt commitments, after its economy shrank more than previously reported.

The rate at which London-based banks say they can borrow for three months in dollars climbed to the highest level in more than a year yesterday. The London interbank offered rate, or Libor, for dollar loans rose to the highest since August 2010, according to the British Bankers’ Association.

The Stoxx 600 Banks Index dropped 8.4 percent. Societe Generale, France’s second-largest lender, and BCP, Portugal’s second-biggest publicly traded bank by market value, fell 21 percent and 17 percent, respectively.

RBS, Britain’s biggest government-owned lender, and Barclays each fell 13 percent. The banks were among European, Asian and American lenders sued by the U.S. Federal Housing Finance Agency on Sept. 2 to recoup $196 billion spent on mortgage-backed securities bought by Fannie Mae and Freddie Mac.

Porsche Plunges

Porsche SE plunged 15 percent in the week and posted the worst decline in more than two years yesterday after saying efforts to combine with Volkswagen AG by the end of 2011 had failed because of pending lawsuits. Preferred shares of Volkswagen, Europe’s largest automaker, slid 5 percent.

Verbund AG tumbled 16 percent, the most since 2008, after Austria’s biggest power company cut its guidance for 2011 and gave a “cautious” outlook for next year.

YIT Oyj, Finland’s biggest builder, slid 17 percent after saying excessive levels of ammonia were found in residential units it built in St. Petersburg, Russia.

Novartis AG, the drugmaker based in Basel, gained 7.9 percent while Cie. Financiere Richemont SA, the world’s second- biggest luxury-goods company, climbed 6 percent. Investors bought Swiss exporters after the country’s central bank set a ceiling for the franc’s value against the euro. The Swiss currency tumbled 7.3 percent to 1.21 per euro, the biggest weekly drop since the creation of the single currency.

Tullow Oil Plc (TLW) jumped 27 percent, the most since 2008. The U.K. explorer behind West Africa’s biggest offshore discovery in a decade said an offshore find in French Guiana opened up a new hydrocarbon basin on the other side of the Atlantic.

To contact the reporter on this story: Alexis Xydias in London at axydias@bloomberg.net

To contact the editor responsible for this story: Andrew Rummer at arummer@bloomberg.net

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ECB Dealt a Blow as Executive Board Member Stark of Germany Steps Down

By Matthew Brockett and Jeff Black - Sep 9, 2011 10:47 PM GMT+0700

Juergen Stark, an executive board member of the European Central Bank. Photographer: Michele Tantussi/Bloomberg

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Sept. 9 (Bloomberg) -- Richard Lacaille, chief investment officer at State Street Global Advisors, talks about Juergen Stark's resignation from the European Central Bank’s Executive Board. Lacaille also discusses the euro-area debt crisis and investment strategies. He talks with Andrea Catherwood on Bloomberg Television's "Last Word." (Source: Bloomberg)

Juergen Stark resigned from the European Central Bank’s Executive Board after protesting the bank’s bond purchases on a conference call earlier this week, said a euro-area central bank official familiar with the meeting.

During the Sept. 4 call, Stark, 63, expressed his strong opposition to the program, which was expanded last month when the ECB started buying Italian and Spanish bonds, said the official, who spoke on condition of anonymity because the discussions are confidential. Stark was supported by the central banks of Austria and the Netherlands, the person said. The resignation of Stark, the ECB’s chief economist, is a blow to the bank, the official said, noting he is the second German ECB member after Axel Weber to leave over the bond program.

Stark’s resignation, less than two months before President Jean-Claude Trichet’s term ends, suggests policy makers are increasingly split over the best way to fight Europe’s debt crisis. The ECB’s bond purchases have also been opposed by Bundesbank President Jens Weidmann and his predecessor Weber, who earlier this year pulled out of the running to succeed Trichet.

“There is quite a severe row going on,” said Juergen Michels, chief euro-region economist at Citigroup Inc. in London. “It seems that it went too far.”

‘Personal Reasons’

The euro extended its decline after news of Stark’s possible resignation was first published. It traded at $1.3662 at 5:37 p.m. in Frankfurt, down 1.6 percent on the day.

Stark today informed Trichet that, “for personal reasons, he will resign from his position,” the Frankfurt-based ECB said in a statement. “Stark will stay on in his current position until a successor is appointed, which, according to the appointment procedure, will be by the end of this year.”

The German government will nominate Deputy Finance Minister Joerg Asmussen to replace Stark on the ECB’s six-member board, Germany’s N-TV reported, without saying where it got the information.

The ECB, which started its bond program in May last year when Greece’s fiscal crisis began to spread to other euro-area countries, has so far spent 129 billion euros ($176 billion) on the bonds of distressed governments in an attempt to lower their yields. While the ECB says it is trying to ensure the transmission of its interest rates, Stark told Bloomberg News on Aug. 18 that the purchases blur the line between monetary and fiscal policy.

No ‘Glowing Advocate’

“It’s generally known that I’m not a glowing advocate of these purchases,” Stark said. “I see the rationale. Our accommodative monetary policy isn’t being transmitted in certain regions. So it’s justifiable from a policy point of view. But there’s an important point -- we are also reducing interest rates for the sovereign. That’s where the problem is.”

Stark’s eight-year term was due to end on May 31, 2014. When he and Trichet depart, half of the ECB’s board will be new. Belgium’s Peter Praet joined in June. Bank of Italy Governor Mario Draghi will take the ECB’s helm on Nov. 1.

Trichet yesterday said the central bank has cut its growth forecasts for this year and next and reduced its assessment of inflation risks, opening the door for further stimulus measures. Stark is one of the ECB’s most ardent inflation fighters.

“Things do not look too good from outside, with a second German leaving the Governing Council to openly criticize the ECB after Weber,” said Laurent Bilke, a former ECB economist now working at Nomura International in London. “Good luck to Mario Draghi.”

To contact the reporters on this story: Matthew Brockett in Frankfurt at mbrockett1@bloomberg.net; Jeffrey Black in Frankfurt at jblack25@bloomberg.net

To contact the editor responsible for this story: Craig Stirling at cstirling1@bloomberg.net

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Crude Oil Drops Most in a Week as Euro Tumbles on European Debt Crisis

By Margot Habiby - Sep 10, 2011 3:10 AM GMT+0700

Oil dropped the most in a week in New York as the euro tumbled against the dollar on concern that Greece’s deteriorating debt crisis will lead to a default.

Oil fell 2 percent after Europe’s single currency declined to a six-month low and European bank and sovereign credit risk surged to all-time highs. A plan for jobs growth announced yesterday by President Barack Obama failed to boost confidence in the U.S., the world’s largest economy.

“The concerns out of Europe and the positive relationship between oil prices and the euro are the catalyst,” said Stephen Schork, president of the Schork Group Inc., an energy advisory company in Villanova, Pennsylvania. “The euro is getting crushed and putting pressure on all our markets right now.”

Crude for October delivery dropped $1.81 to settle at $87.24 a barrel on the New York Mercantile Exchange. Prices rose 0.9 percent this week, the third consecutive advance. Futures have fallen 4.5 percent this year.

Brent crude for October settlement declined $1.78, or 1.6 percent, to $112.77 a barrel on London’s ICE Futures Europe exchange. Brent’s premium to Nymex-traded West Texas Intermediate rose 3 cents to $25.53.

The euro fell 1.5 percent to $1.3669 at 3:23 p.m. in New York, the lowest level since February. A weaker euro and stronger dollar curb commodities’ appeal as an alternative to the U.S. currency. The euro has plummeted 3.8 percent this week.

German Chancellor Angela Merkel’s government is preparing plans to shore up German banks in the event Greece fails to meet the terms of its aid package and defaults, three coalition officials said.

Stark’s Resignation

Juergen Stark of Germany resigned from the European Central Bank’s Executive Board today after protesting the bank’s bond purchases on a conference call earlier in the week, said a euro area bank official familiar with the meeting. The purchase program was expanded last month when the ECB started buying Italian and Spanish bonds.

“When Stark stepped down, that signaled the possibility of more German opposition to bailing out Greece,” said Phil Flynn, vice president of research at PFGBest in Chicago. “Oil is pricing the increasing odds of demand destruction on the European concerns and following the president’s speech last night.”

Obama challenged Congress to pass a $447 billion jobs plan “right away” to boost spending on infrastructure, stem teacher layoffs and halve payroll taxes paid by workers and small- business owners. He addressed a joint session of Congress yesterday and campaigned for the plan today in Virginia.

U.S. Economy

The president’s remarks came after Federal Reserve Chairman Ben S. Bernanke yesterday stopped short of outlining new plans to revive growth.

“Bernanke didn’t give any further insight into stimulus measures, and Obama’s speech has been received very tepidly, which continues to weigh on concerns about the U.S. economy,” said Matt Smith, a commodities analyst for Summit Energy Services Inc. in Louisville, Kentucky.

The Standard & Poor’s 500 Index fell 2.7 percent to 1,154.23 at 4:03 p.m. in New York. The Dow Jones Industrial Average dropped 2.7 percent to 10,992.13.

Oil also declined on signals that Libya may export a crude- oil cargo this month for the first time since March from the country’s west. The holder of Africa’s biggest oil reserves is rebuilding production which plunged 97 percent during an armed conflict to depose ruler Muammar Qaddafi, based on Bloomberg News output estimates.

Libyan Exports

“There are two critical factors dominating the outlook for the oil markets at this time, what global economic developments are doing to demand and the prospects for a pickup in Libyan oil exports,” according to a report published today by Deutsche Bank analysts including Adam Sieminski, the company’s Washington-based chief energy economist.

An 80,000-metric-ton cargo of crude is being offered for shipment from the port of Mellitah this month, three people with direct knowledge of the transaction said yesterday. The oil, equal to 600,000 barrels, will be loaded from Sept. 15 to 17, the people said, declining to be identified because the consignment has yet to be publicly announced.

Oil also declined as the National Hurricane Center forecast that Tropical Storm Nate will move toward the Mexican coast, missing the biggest U.S. oil-producing region in the Gulf or Mexico. Nate was 150 miles (240 kilometers) west of Campeche, Mexico, at about 2 p.m. New York time.

Fourteen of 28 analysts, or 50 percent of those in a Bloomberg News survey, forecast oil prices will decline next week amid heightened concern that global economic growth is slowing. Seven respondents, or 25 percent, predicted prices will increase and seven estimated there will be little change. Last week, 50 percent of surveyed analysts projected a drop.

Oil volume in electronic trading on the Nymex was 597,732 contracts as of 3:24 p.m. in New York. Volume totaled 790,112 contracts yesterday, 16 percent above the average of the past three months. Open interest was 1.5 million contracts.

To contact the reporter on this story: Margot Habiby in Dallas at mhabiby@bloomberg.net.

To contact the editor responsible for this story: Dan Stets at dstets@bloomberg.net.

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Asia Stocks Slide on Concern U.S. Economy May Weaken, European Debt Crisis

By Shani Raja - Sep 10, 2011 6:34 AM GMT+0700

Asian stocks fell this week, snapping a fortnight of advance, as exporters dropped on speculation the world’s largest economy is headed toward recession and banks slid amid concern Europe may fail to contain its sovereign debt crisis.

Honda Motor Co., a carmaker with more than 40 percent of its revenue in North America, plunged 6.4 percent in Tokyo after a report showed the U.S. job market stalled in August. BHP Billiton Ltd. (BHP) sank 2.9 percent in Sydney. HSBC Holdings Plc (HSBA), Europe’s largest lender by market value, slumped 3.3 percent in Hong Kong after the cost of insuring against default on European sovereign and financial debt surged to records. Fanuc Corp. (6954) tumbled 15 percent after an industry group said growth in machine-tool orders slowed.

“It’s clear the U.S. economy needed more stimulus as there’s a limit to what monetary policy can do,” said Stephen Halmarick, Sydney-based head of investment markets research at Colonial First State Global Asset Management, which oversees about $150 billion. “There’s growing concern that the sovereign-debt crisis in the EU is now manifesting into a sharp slowdown in the economy and a banking crisis,”

The MSCI Asia Pacific Index fell 2.7 percent this week to 120.78, snapping a 3.9 percent two-week advance. The gauge tumbled 8.6 percent last month amid escalating concern over Europe’s debt crisis and after Standard & Poor’s downgraded the U.S.’s credit rating. Stocks in the Asian benchmark are valued at about 11.9 times estimated earnings on average, compared with 11.5 times for the S&P 500 and 9.3 times for the Stoxx 600.

Nikkei, Kospi

Japan’s Nikkei 225 (NKY) Stock Average dropped 2.4 percent in a week when the Cabinet Office also said Japan’s economy contracted more than an initial government estimate. Australia’s S&P/ASX 200 Index slipped 1.1 percent after a statistics bureau report showed the nation’s employers unexpectedly cut jobs for a second straight month in August.

South Korea’s Kospi Index (KOSPI) slid 2.9 percent and Hong Kong’s Hang Seng Index (HSI) retreated 1.7 percent. The Shanghai Composite Index slid 1.2 percent this week.

Honda, which counts North America as its biggest market for sales, plunged 6.4 percent to 2,347 yen in Tokyo. Canon Inc. (7751), which earns more than 80 percent of its sales overseas, declined 2.9 percent to 3,490 yen. James Hardie Industries SE (JHX), a building materials supplier that gets almost 70 percent of sales from the U.S., sank 4.2 percent to A$5.78 in Sydney.

A report Sept. 2 showed U.S. payrolls were unchanged in August, the weakest reading since September 2010. The median forecast in a Bloomberg News survey called for an increase of 68,000.

‘Scary Report’

“It was a scary report,” Dan North, chief U.S. economist at Euler Hermes ACI in Owings Mills, Maryland, said in an interview from Singapore with Susan Li on Bloomberg Television on Sept. 5. “When you get to negative job growth, which we’re very close to now, it means you’re already in a recession.”

Stocks fell even as U.S. President Barack Obama outlined a jobs plan that would inject $447 billion into the economy, and Federal Reserve Chairman Ben S. Bernanke said policymakers will discuss ways to boost growth at their next meeting.

Fed officials gather for a two-day meeting on Sept. 20 that was expanded from the one day originally scheduled to “allow a fuller discussion” of the economy and the central bank’s possible policy response.

BHP, Jiangxi

BHP Billiton, the world’s No. 1 mining company and Australia’s biggest oil producer, fell 2.9 percent to A$37.91 in Sydney. Rio Tinto Group, the second-largest miner by sales, slid 1.1 percent to A$71.25. In Hong Kong, Jiangxi Copper Co., China’s No. 1 producer of the metal, slumped 4.6 percent to HK$20.95, while Chinese oil explorer Cnooc Ltd. (883) tumbled 9.3 percent to HK$14.

Belle International Holdings Ltd. (1880), a Chinese retailer of women’s shoes, plunged 10 percent to HK$14.60 in Hong Kong and Tencent Holdings Ltd. (700), a Shenzhen-based Internet company, lost 1.5 percent to HK$184.50.

China’s inflation eased in August from a three-year high, the National Bureau of Statistics said in Beijing on Sept. 9. Still, consumer prices climbed 6.2 percent from a year earlier. A separate report showed industrial output growth in China trailed estimates.

Asian stocks also slipped this week after an election loss for German Chancellor Angela Merkel’s party and reports of a rift between Greece and the International Monetary Fund fueled concern that support for bailing out indebted European nations is waning. Later in the week, European Central Bank President Jean-Claude Trichet said “downside risks” for the region have risen, while resisting calls to lower interest rates.

Financial Stocks

HSBC fell 3.3 percent to HK$64.95 in Hong Kong. Korea Exchange Bank (004940) retreated 4.3 percent to 7,590 won in Seoul. Mitsubishi UFJ Financial Group Inc. (8306), Japan’s biggest lender by market value, declined 2.9 percent to 332 yen in Tokyo after the cost of insuring against default on European sovereign and financial debt surged to records.

Investors drove yields higher on the bonds of Greece, Portugal, Spain and Italy early in the week on doubts Europe’s leaders will be able to stop the crisis spreading. The yield on the Greek two-year note rose above its price for the first time on Sept. 5, indicating mounting concern the nation will default on the debt.

Lasting Solution

“Volatility is likely to remain high until there’s clarity around Europe’s ability to work out a lasting solution,” said Nader Naeimi, a Sydney-based strategist for AMP Capital Investors Ltd., which manages almost $100 billion. “Right now, it seems policy makers are going in the opposite direction. While the fundamentals in Asia are in better shape than elsewhere, shares here will get caught up in the crossfire.”

Fanuc, Japan’s No. 1 maker of controls used to run machine tools, fell 15 percent to 10,730 yen, after the Japan Machinery Tool Builders’ Association said growth in Japanese orders slowed in August, falling 12.7 percent from July. A separate Cabinet Office report this week said Japanese machinery orders fell 8.2 percent in July after rising 7.7 percent in June.

Komatsu Ltd. (6301), the world’s No. 2 maker of construction equipment and Japan’s largest construction machinery maker, sank 14 percent to 1,797 yen.

Technology Shares

Among stocks that advanced this week, Hynix Semiconductor Inc. (000660), the world’s second-largest maker of computer memory, jumped 4.2 percent to 19,900 won in Seoul, leading some technology stocks higher on speculation chip prices will recover. Samsung Electronics Co. gained 1.4 percent to 780,000 won.

The price of the benchmark DDR3 2-gigabit DRAM has fallen 3 percent this month after falling 14 percent in August, according to data from Taipei-based Dramexchange Technology Inc., operator of Asia’s largest spot market for semiconductors.

“There’s some consensus that the chip market is near its bottom,” Ahn Seong Ho, an analyst at Hanwha Securities Co. who covers technology stocks, said in Seoul.

To contact the reporters on this story: Shani Raja in Sydney at sraja4@bloomberg.net.

To contact the editor responsible for this story: Nick Gentle at ngentle2@bloomberg.net

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