By Svenja O'Donnell
July 15 (Bloomberg) -- U.K. house-price declines in June stayed close to the most widespread since the Royal Institution of Chartered Surveyors started measuring the property market in 1978, pushing the country closer to a recession.
The number of residential property agents and surveyors saying prices fell exceeded those reporting gains by 88 percentage points, the London-based group said today. That compares with 92.2 percent the previous month, and 94.2 in April, the worst since the series began. The reading for London prices was minus 80.
U.K. mortgage approvals fell to the lowest in at least nine years in May, and the nation faces a house-price drop which is ``probably very sharp,'' Bank of England policy maker Kate Barker said in a newspaper interview published yesterday. Accelerating inflation has prevented the central bank from cutting interest rates from the current 5 percent to avoid a recession.
``With demand so low, would-be buyers are negotiating from a position of strength,'' Jeremy Leaf, a spokesman for RICS, said in a statement. ``However, transaction levels remain incredibly low, with many buyers cut out of the process by tight lending conditions.''
Banks are curbing lending following the collapse of the U.S. subprime mortgage market, which so far has cost financial institutions worldwide $410 billion in losses and writedowns. They granted 42,000 loans for house purchase in May, the least since the Bank of England's series began in 1999.
Price Declines
The ratio of completed sales compared to the stock of unsold properties fell to 18.2 percent in June, the least since October 1995, RICS said. House prices in East Anglia and the East and West Midlands had the most widespread declines, the survey showed. Home values in Scotland were the least affected.
``The difficulty of obtaining finance and the cost, combined with a lack of confidence and negative news, has created a stagnant market with very little activity and very few buyers,'' said Richard Cotton, an estate agent at Cluttons in London's Kensington and Chelsea district.
HBOS Plc, the U.K.'s biggest mortgage lender, said last week that house prices fell in June from a year earlier by the most in 15 years. Homebuilders Redrow Plc and Bovis Homes Group Plc said on July 9 they will each cut their workforce by 40 percent after the housing slump wiped out sales.
Consumer spending is also showing signs of weakening. Retail sales in shops open at least a year fell 0.4 percent in June compared with a year ago, the British Retail Consortium said today. The BRC's director general, Stephen Robertson, said in a Bloomberg Television interview that the current environment was ``perhaps even as tough a market as the 1970s.''
The downturn comes as the Bank of England faces the worst inflation threat in a generation. Consumer prices probably rose 3.6 percent in June from a year earlier, according to the median forecast of 36 economists surveyed by Bloomberg. The Office for National Statistics will release the figures at 9:30 a.m. today.
To contact the reporter on this story: Svenja O'Donnell in London at sodonnell@bloomberg.net.
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Tuesday, July 15, 2008
Alliance & Leicester Shareholders Seek Rival Bid, FT Reports
By Lenka Ponikelska
July 15 (Bloomberg) -- Alliance & Leicester Plc shareholders sought a rival bid after the lender agreed to be bought by Banco Santander SA for 1.26 billion pounds ($2.6 billion), seven months after it gave up a deal with the Spanish bank that valued it at more than twice as much, the Financial Times reported.
Alliance & Leicester jumped to 335 pence yesterday, 17 pence more the per-share price implied by Santander's all-share offer, as investors speculated other lenders may bid, the newspaper said. Only few banks, including Lloyds TSB Group Plc and National Australia Bank Ltd., which owns Yorkshire Bank and Clydesdale Bank, would be able to challenge Santander, the FT said. It was questionable whether they would bid, the newspaper said, citing unidentified banking sources.
The Financial Service Authority monitored the talks but has not pressed the lender to accept the bid, the newspaper said.
To contact the reporter on this story: Lenka Ponikelska in London lponikelska1@bloomberg.net
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July 15 (Bloomberg) -- Alliance & Leicester Plc shareholders sought a rival bid after the lender agreed to be bought by Banco Santander SA for 1.26 billion pounds ($2.6 billion), seven months after it gave up a deal with the Spanish bank that valued it at more than twice as much, the Financial Times reported.
Alliance & Leicester jumped to 335 pence yesterday, 17 pence more the per-share price implied by Santander's all-share offer, as investors speculated other lenders may bid, the newspaper said. Only few banks, including Lloyds TSB Group Plc and National Australia Bank Ltd., which owns Yorkshire Bank and Clydesdale Bank, would be able to challenge Santander, the FT said. It was questionable whether they would bid, the newspaper said, citing unidentified banking sources.
The Financial Service Authority monitored the talks but has not pressed the lender to accept the bid, the newspaper said.
To contact the reporter on this story: Lenka Ponikelska in London lponikelska1@bloomberg.net
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Asian Currencies Rise: Baht Gains on Rate Outlook, U.S. Concern
By Aaron Pan and Shanthy Nambiar
July 15 (Bloomberg) -- Asian currencies rose, led by the Thai baht on speculation the central bank will raise interest rates tomorrow to damp inflation.
The baht rose the most in a week against the dollar, which fell against seven out of the 10 most-traded Asian currencies outside of Japan on concern U.S. credit-market losses will worsen. The Bank of Thailand will increase the one-day bond repurchase rate for the first time in two years tomorrow, economists predict.
The local currency ``is taking its cues from the dollar, and there is a bit of consolidating,'' said Carl Rajoo, a regional Asian economist at Forecast Singapore Pte. ``The Bank of Thailand is hawkish on inflation. If the rate hike is in line with expectations, the baht will continue to consolidate.''
The Thai currency gained 0.6 percent to 33.47 per dollar as of 11:17 a.m. in Bangkok, according to data compiled by Bloomberg.
The Bank of Thailand has held its benchmark interest rate at 3.25 percent since August and last increased it in June 2006. Policy makers are expected to raise the rate by a quarter- percentage point tomorrow to 3.5 percent, according to 16 of 19 economists surveyed by Bloomberg News. The remaining three predict a half-point increase.
Expectations of higher interest rates also helped support Indonesia's rupiah, which reached 9,099 per dollar, its strongest since March 10. The local currency traded at 9,123 per dollar, compared with 9,156 yesterday, according to data compiled by Bloomberg.
Stronger Rupiah
``We could see the currency continuing to strengthen gradually,'' said Christy Tan, a senior currency strategist at Bank of America Corp. in Singapore. ``The central bank's monetary tightening efforts started ahead of the others and there's prospects of them staying on this path longer than others in the region.''
Bank Indonesia raised its benchmark interest rate for the third straight month on July 3 to slow inflation, which is at a 21-month high of 11 percent. The central bank said last week it will use ``all instruments'' to slow price gains. The rupiah also gained today as Bisnis Indonesia reported foreign direct investment in the six months to June more than doubled from the same period last year.
U.S. Credit Crisis
Malaysia's ringgit reached a six-week high and Singapore's dollar advanced on speculation investors will steer more funds into Asian assets as U.S. credit-market losses swell. U.S. stocks slumped yesterday, led by financial shares, on concern the nation's regional banks are short of capital.
``What's happening in the U.S. could sway more funds into the Asian markets and that's good for regional currencies,'' said Awaluddin Shariff, a foreign-exchange trader at EON Bank Bhd. in Kuala Lumpur. ``There are concerns about U.S. banks and stock market.''
The ringgit traded at 3.2148 per dollar versus 3.2300 late yesterday, according to data compiled by Bloomberg. The intra- day high of 3.2130 per dollar is the ringgit's highest level since June 2. The currency may reach as high as 3.21 today, Awaluddin said.
Singapore's dollar added 0.6 percent to S$1.3483, Vietnam's dong was little changed at 16,834 per dollar and Taiwan's dollar was also little changed, trading at NT$30.412. The South Korean won fell 0.1 percent to 1,005.90.
The U.S. Treasury and the Federal Reserve on July 13 announced a rescue plan for Fannie Mae and Freddie Mac, the two- largest buyers of home loans, to help restore confidence after their share prices tumbled almost 50 percent last week. The stocks extended their slide yesterday. Fed Chairman Ben S. Bernanke and Treasury Secretary Henry Paulson will later today address U.S. lawmakers on their response to the credit crisis.
To contact the reporters on this story: Aaron Pan in Hong Kong at apan8@bloomberg.net; Shanthy Nambiar in Bangkok at snambiar1@bloomberg.net.
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July 15 (Bloomberg) -- Asian currencies rose, led by the Thai baht on speculation the central bank will raise interest rates tomorrow to damp inflation.
The baht rose the most in a week against the dollar, which fell against seven out of the 10 most-traded Asian currencies outside of Japan on concern U.S. credit-market losses will worsen. The Bank of Thailand will increase the one-day bond repurchase rate for the first time in two years tomorrow, economists predict.
The local currency ``is taking its cues from the dollar, and there is a bit of consolidating,'' said Carl Rajoo, a regional Asian economist at Forecast Singapore Pte. ``The Bank of Thailand is hawkish on inflation. If the rate hike is in line with expectations, the baht will continue to consolidate.''
The Thai currency gained 0.6 percent to 33.47 per dollar as of 11:17 a.m. in Bangkok, according to data compiled by Bloomberg.
The Bank of Thailand has held its benchmark interest rate at 3.25 percent since August and last increased it in June 2006. Policy makers are expected to raise the rate by a quarter- percentage point tomorrow to 3.5 percent, according to 16 of 19 economists surveyed by Bloomberg News. The remaining three predict a half-point increase.
Expectations of higher interest rates also helped support Indonesia's rupiah, which reached 9,099 per dollar, its strongest since March 10. The local currency traded at 9,123 per dollar, compared with 9,156 yesterday, according to data compiled by Bloomberg.
Stronger Rupiah
``We could see the currency continuing to strengthen gradually,'' said Christy Tan, a senior currency strategist at Bank of America Corp. in Singapore. ``The central bank's monetary tightening efforts started ahead of the others and there's prospects of them staying on this path longer than others in the region.''
Bank Indonesia raised its benchmark interest rate for the third straight month on July 3 to slow inflation, which is at a 21-month high of 11 percent. The central bank said last week it will use ``all instruments'' to slow price gains. The rupiah also gained today as Bisnis Indonesia reported foreign direct investment in the six months to June more than doubled from the same period last year.
U.S. Credit Crisis
Malaysia's ringgit reached a six-week high and Singapore's dollar advanced on speculation investors will steer more funds into Asian assets as U.S. credit-market losses swell. U.S. stocks slumped yesterday, led by financial shares, on concern the nation's regional banks are short of capital.
``What's happening in the U.S. could sway more funds into the Asian markets and that's good for regional currencies,'' said Awaluddin Shariff, a foreign-exchange trader at EON Bank Bhd. in Kuala Lumpur. ``There are concerns about U.S. banks and stock market.''
The ringgit traded at 3.2148 per dollar versus 3.2300 late yesterday, according to data compiled by Bloomberg. The intra- day high of 3.2130 per dollar is the ringgit's highest level since June 2. The currency may reach as high as 3.21 today, Awaluddin said.
Singapore's dollar added 0.6 percent to S$1.3483, Vietnam's dong was little changed at 16,834 per dollar and Taiwan's dollar was also little changed, trading at NT$30.412. The South Korean won fell 0.1 percent to 1,005.90.
The U.S. Treasury and the Federal Reserve on July 13 announced a rescue plan for Fannie Mae and Freddie Mac, the two- largest buyers of home loans, to help restore confidence after their share prices tumbled almost 50 percent last week. The stocks extended their slide yesterday. Fed Chairman Ben S. Bernanke and Treasury Secretary Henry Paulson will later today address U.S. lawmakers on their response to the credit crisis.
To contact the reporters on this story: Aaron Pan in Hong Kong at apan8@bloomberg.net; Shanthy Nambiar in Bangkok at snambiar1@bloomberg.net.
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Australian, N.Z. Dollars Gain as U.S. Financial Markets Worsen
By Ron Harui and Candice Zachariahs
July 15 (Bloomberg) -- The Australian dollar rose to a 25- year high and the New Zealand dollar advanced to the strongest in five weeks on speculation investors will be attracted to the nations' assets as losses at U.S. financial companies deepen.
Australia's currency, known as the Aussie, climbed for a fourth day and New Zealand's gained for a fifth after a stock index of U.S. financial firms slumped on speculation regional banks are short of capital. The New Zealand dollar was supported after a government report showed consumer prices rose at the fastest pace in 18 years.
``The Aussie is showing itself to be resilient in the face of financial turmoil in the U.S.,'' said Sean Callow, senior currency strategist in Sydney at Westpac Banking Corp., Australia's fourth-biggest bank. ``The grave concerns over the U.S. financial sector are playing out as a net negative for the dollar.''
Australia's dollar rose 0.9 percent to 97.72 U.S. cents as of 4:48 p.m. in Sydney, compared with 96.85 cents late in Asian trading yesterday. It earlier touched 97.77 cents, the strongest level since 1983. The currency bought 103.29 yen from 103.31.
New Zealand's currency strengthened 0.8 percent, the most since June 16, to 76.78 U.S. cents. It touched 76.79 cents, the strongest level since June 9. The currency fetched 81.19 yen from 81.21 yen.
The Australian dollar maintained its gains after the central bank said in minutes of its July 1 meeting released today that ``there had been no material change in the inflation outlook'' and its 12-year-high benchmark interest rate is restraining the economy.
`Well Placed'
The Australian dollar extended the past five days of gains to 2.6 percent, the best performance among the 16 most-active currencies, before Federal Reserve Chairman Ben S. Bernanke and Treasury Secretary Henry Paulson address U.S. lawmakers on their response to widening credit-market losses.
Global banks and securities firms have reported losses of about $400 billion as the subprime-mortgage market collapsed. Australia's five largest lenders shunned investments linked to the subprime market, helping them avoid the losses reported by firms on Wall Street and in Europe.
Reserve Bank of Australia Governor Glenn Stevens said on July 9 that Australia's main institutions were ``well placed'' to withstand the current environment.
The New Zealand dollar advanced after a government report showed inflation quickened at the fastest pace in 18 years last quarter, prompting traders to pare bets the central bank will lower interest rates.
`Attractive' Yield
``The yield is still very attractive in New Zealand,'' said Boris Schlossberg, a senior currency strategist at currency trader DailyFX.com in New York. ``We're seeing a broad anti- dollar move and the kiwi is benefiting as being part of the group of high-yielders.''
New Zealand's benchmark interest rate of 8.25 percent is the highest of any AAA rated nation. Reserve Bank of New Zealand Governor Alan Bollard has left borrowing costs at a record high since July last year, betting the slowing economy will curb inflation.
The consumer prices index rose 1.6 percent from the first quarter, Statistics New Zealand said in Wellington today. The median estimate of economists surveyed by Bloomberg was for inflation of 1.4 percent.
Traders see a 50 percent chance the RBNZ will cut its benchmark rate by a quarter-percentage point at its next meeting on July 24, compared with 59 percent odds yesterday, according to a Credit Suisse Group index based on interest-rate swaps.
Australian government bonds gained, pushing the yield on the 10-year security down 11 basis points to 6.31 percent. The price of the 5.25 percent bond due March 2019 rose 0.778, or A$7.78 per A$1,000 face amount, to 91.893.
New Zealand's bonds also advanced, with the 10-year yield declining 6 basis points to 6.03 percent. A basis point is 0.01 percentage point.
To contact the reporter on this story: Ron Harui in Singapore at rharui@bloomberg.net; Candice Zachariahs in New York at czachariahs1@bloomberg.net.
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Japan's Investors May Buy Australian, N.Z. Dollars, RBS Says
By Ron Harui
July 15 (Bloomberg) -- Japanese individual investors may keep buying the Australian and New Zealand dollars because of the South Pacific nations' interest-rate advantage over Japan, according to Royal Bank of Scotland Group Plc.
Housewives, pensioners, and businessmen boosted purchases of New Zealand's dollar, known as the kiwi, to a record last week as gains in Japan's currency provided them with an opportunity to buy higher-yielding assets at cheaper levels, according to data from the Tokyo Financial Exchange. The yen sales came even as concerns increased that New Zealand's economy may have slipped into a recession.
``Mrs. Watanabe likes kiwi,'' said Masafumi Yamamoto, head of foreign-exchange strategy in Tokyo at Royal Bank of Scotland, the fourth-largest currency trader, in a research note dated yesterday. ``Japanese retail investors don't care yet about the economic slowdown becoming evident in Australia and New Zealand and are likely to continue buying the high-yielding currencies as long as the yield gap remains.''
Investors increased net long positions on New Zealand's currency against the yen to an all-time high of 150,829 contracts on July 8 and on Australia's dollar to a record 79,920 on July 1, according to Tokyo Financial Exchange data. A long position is a bet on an asset price's gain.
The New Zealand dollar traded at 81.09 yen as of 3 p.m. in Tokyo from 81.21 yen late in Asia yesterday. The Australian dollar bought 103.18 yen, compared with 103.31 yen.
The Australian and New Zealand dollars are the best and third-best performers respectively, among the 16 most-active currencies versus the yen the past five days.
Rate Difference
The Bank of Japan kept its benchmark interest rate at 0.5 percent today while cutting its economic growth forecast. Benchmark interest rates are 8.25 percent in New Zealand and 7.25 percent in Australia, making the currencies of the nations favorites for so-called carry trades.
In a carry trade, investors get funds in a country with low borrowing costs and invest in one with higher interest rates, earning the spread between the borrowing and lending rate. The risk is that currency market moves erase those profits.
`Significant Headwind'
``The behavior of such investors, given the size of their asset holdings, is a potential significant headwind against Australian and New Zealand dollar weakness,'' said Yamamoto, who confirmed the details of the report.
So-called margin trading of currencies in Japan using borrowed funds rose 86 percent in the first quarter to a record 213 trillion yen ($2 billion), figures from the Financial Futures Association of Japan showed in May.
Japanese households have 1,490 trillion yen in financial assets, according to the Bank of Japan.
Australia's dollar, know as the Aussie, has climbed 10.6 percent and New Zealand's dollar advanced 2.3 percent the past three months on prospects that both countries will maintain their interest-rate advantage over Japan.
``Japanese households believe large yield gaps versus Japan will be maintained for the foreseeable future, despite monetary policy easing in Australia and New Zealand that we think is likely next year,'' Yamamoto said. ``They remain buyers on dips of Aussie-yen and kiwi-yen.''
Australian Finance Minister Lindsay Tanner said in a speech today at the Royal Melbourne Hospital that the economy faces ``uncertain times' because of the global credit slump, high inflation and record oil prices.
Heading for Recession
New Zealand's economy contracted 0.3 percent in the first quarter from the previous three months, a government report showed on June 27. Eight of 13 economists surveyed by Bloomberg say it also shrank in the second quarter, putting the economy in its first recession since 1998.
Traders are betting the Reserve Bank of Australia will cut its benchmark rate by 2 basis points, or 0.02 percentage point, in the next 12 months, according to a Credit Suisse Group index based on interest rate swaps. A similar index shows the Reserve Bank of New Zealand will lower its benchmark rate by 136 basis points, or 1.36 percentage points, in the next year.
To contact the reporter on this story: Ron Harui in Singapore at rharui@bloomberg.net
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July 15 (Bloomberg) -- Japanese individual investors may keep buying the Australian and New Zealand dollars because of the South Pacific nations' interest-rate advantage over Japan, according to Royal Bank of Scotland Group Plc.
Housewives, pensioners, and businessmen boosted purchases of New Zealand's dollar, known as the kiwi, to a record last week as gains in Japan's currency provided them with an opportunity to buy higher-yielding assets at cheaper levels, according to data from the Tokyo Financial Exchange. The yen sales came even as concerns increased that New Zealand's economy may have slipped into a recession.
``Mrs. Watanabe likes kiwi,'' said Masafumi Yamamoto, head of foreign-exchange strategy in Tokyo at Royal Bank of Scotland, the fourth-largest currency trader, in a research note dated yesterday. ``Japanese retail investors don't care yet about the economic slowdown becoming evident in Australia and New Zealand and are likely to continue buying the high-yielding currencies as long as the yield gap remains.''
Investors increased net long positions on New Zealand's currency against the yen to an all-time high of 150,829 contracts on July 8 and on Australia's dollar to a record 79,920 on July 1, according to Tokyo Financial Exchange data. A long position is a bet on an asset price's gain.
The New Zealand dollar traded at 81.09 yen as of 3 p.m. in Tokyo from 81.21 yen late in Asia yesterday. The Australian dollar bought 103.18 yen, compared with 103.31 yen.
The Australian and New Zealand dollars are the best and third-best performers respectively, among the 16 most-active currencies versus the yen the past five days.
Rate Difference
The Bank of Japan kept its benchmark interest rate at 0.5 percent today while cutting its economic growth forecast. Benchmark interest rates are 8.25 percent in New Zealand and 7.25 percent in Australia, making the currencies of the nations favorites for so-called carry trades.
In a carry trade, investors get funds in a country with low borrowing costs and invest in one with higher interest rates, earning the spread between the borrowing and lending rate. The risk is that currency market moves erase those profits.
`Significant Headwind'
``The behavior of such investors, given the size of their asset holdings, is a potential significant headwind against Australian and New Zealand dollar weakness,'' said Yamamoto, who confirmed the details of the report.
So-called margin trading of currencies in Japan using borrowed funds rose 86 percent in the first quarter to a record 213 trillion yen ($2 billion), figures from the Financial Futures Association of Japan showed in May.
Japanese households have 1,490 trillion yen in financial assets, according to the Bank of Japan.
Australia's dollar, know as the Aussie, has climbed 10.6 percent and New Zealand's dollar advanced 2.3 percent the past three months on prospects that both countries will maintain their interest-rate advantage over Japan.
``Japanese households believe large yield gaps versus Japan will be maintained for the foreseeable future, despite monetary policy easing in Australia and New Zealand that we think is likely next year,'' Yamamoto said. ``They remain buyers on dips of Aussie-yen and kiwi-yen.''
Australian Finance Minister Lindsay Tanner said in a speech today at the Royal Melbourne Hospital that the economy faces ``uncertain times' because of the global credit slump, high inflation and record oil prices.
Heading for Recession
New Zealand's economy contracted 0.3 percent in the first quarter from the previous three months, a government report showed on June 27. Eight of 13 economists surveyed by Bloomberg say it also shrank in the second quarter, putting the economy in its first recession since 1998.
Traders are betting the Reserve Bank of Australia will cut its benchmark rate by 2 basis points, or 0.02 percentage point, in the next 12 months, according to a Credit Suisse Group index based on interest rate swaps. A similar index shows the Reserve Bank of New Zealand will lower its benchmark rate by 136 basis points, or 1.36 percentage points, in the next year.
To contact the reporter on this story: Ron Harui in Singapore at rharui@bloomberg.net
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Dollar Falls on Concern Credit-Market Losses Will Damp Growth
By Kosuke Goto and Stanley White
July 15 (Bloomberg) -- The dollar fell against the yen and euro on speculation Federal Reserve Chairman Ben S. Bernanke and U.S. Treasury Secretary Henry Paulson will tell lawmakers credit-market losses will weigh on U.S. economic growth.
The currency declined to a 25-year low versus the Australian dollar on concern confidence in the debt of Fannie Mae and Freddie Mac will deteriorate even after the U.S. government pledged support for the two-largest buyers of home loans. The yen remained higher after the Bank of Japan kept interest rates unchanged at 0.5 percent today, the lowest among major economies.
``The situation in the U.S. financial sector has become very serious,'' said Yuji Saito, head of foreign-exchange sales n Tokyo at Societe Generale SA, France's second-largest bank by market value. ``Even if Bernanke and Paulson announce possible support measures, it's not easy to buoy the dollar.''
The dollar declined to 105.90 yen as of 7:02 a.m. in London from 106.14 yen in New York yesterday. It weakened to $1.5935 per euro from $1.5908. It fell to within a cent of the record low of $1.6019 reached April 22. The yen traded at 168.73 per euro from 168.89 yesterday, when it fell to 169.75, the lowest since the 15-nation currency debuted in 1999.
The U.S. currency may decline to 105 yen and $1.5950 a euro today, Saito forecast.
Lowest Since 1983
Against Australia's currency, the U.S. currency weaken to 97.57 cents, the lowest level since 1983, before trading at 97.48 cents, from 96.85 cents in late Asian trading yesterday.
The Bank of Japan kept the benchmark overnight lending rate unchanged today, as expected by all 39 economists surveyed by Bloomberg News. Governor Masaaki Shirakawa will hold a press conference at 3:30 p.m. in Tokyo.
The yen may rise as high as 100 per dollar this year as the Bank of Japan is more likely to raise interest rates than the Federal Reserve, said Toyoo Gyohten, former currency-policy chief at Japan's Ministry of Finance.
Japan's central bank may increase borrowing costs should inflation accelerate and the economy sustain growth of at least 1 percent, Gyohten said.
``The Fed is most likely to maintain its current level of interest rates,'' Gyohten, president for the Institute of International Monetary Affairs in Tokyo, said in an interview yesterday. ``The BOJ is more likely to raise rates. The medium- term trend is for a weaker dollar and a stronger yen.''
U.S. stocks fell yesterday, led by financial shares, after the government's seizure of Pasadena, California-based IndyMac Bancorp Inc. and predictions of wider credit losses overshadowed Paulson's pledge to shore up Fannie and Freddie. The Standard & Poor's 500 Index declined 0.9 percent.
`Bottom Yet'
Bernanke will give his semiannual testimony on monetary policy and the economy before the Senate Banking Committee at 10 a.m. Washington time.
``Bernanke will avoid saying anything that could potentially weaken confidence in the dollar,'' said Takuma Kurosawa, global markets treasurer in Tokyo at HSBC Bank, a unit of Europe's biggest lender. ``But the reality is the U.S. housing market and credit squeeze haven't hit bottom yet. That's discouraging investors from holding dollar assets.''
The U.S. currency may fall to 105.50 yen today, he said.
Global banks and securities firms have reported losses of about $400 billion as the subprime-mortgage market collapsed.
The Dollar Index traded on ICE futures in New York, which tracks the greenback against the currencies of six U.S. trading partners, fell for a fifth day to 71.801 today from 71.915 yesterday.
Investor Confidence
The dollar may extend its decline on concern Fannie Mae and Freddie Mac will get the majority of funds they need by borrowing from the Fed rather than an investment from the government, increasing supply of the U.S. currency, said Ashley Davies, a currency strategist in Singapore at UBS AG, the world's second-biggest currency trader.
``Any whiff that the authorities will adopt steps to monetize the problems facing the U.S. housing market would be the trigger to drive the euro-dollar through the $1.60 mark,'' Davies wrote in a report today.
Gains in the euro may be limited on speculation investor confidence in Germany, Europe's largest economy, fell to an almost 16-year low, weakening the case for higher rates.
The ZEW Center for European Economic Research in Mannheim will say its index of investor and analyst expectations fell to minus 55 in July from minus 52.4 the previous month, according to a Bloomberg News survey. The ZEW will release the data today.
`A Sell'
``We're seeing the euro zone economy beginning to slow,'' Greg Salvaggio, vice president of capital markets at Tempus Consulting Inc. in Washington, said in a Bloomberg Television interview. ``Longer run, the euro is a sell. We remain bullish on the dollar and we're looking for levels year-end close to $1.35 to $1.40.''
Losses in the dollar may be limited by speculation reports will show inflation accelerated, spurring traders to add to bets the Fed will raise its benchmark interest rate from 2 percent.
U.S. producer prices increased 8.7 percent from a year earlier in June, the most since 1981, according to a Bloomberg News survey of economists before a Labor Department report today. A report tomorrow will show consumer prices rose 4.5 percent in June, the most since September 2005, according to a separate Bloomberg survey.
To contact the reporters on this story: Kosuke Goto in Tokyo at kgoto2@bloomberg.net; Stanley White in Tokyo at swhite28@bloomberg.net.
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Incitec Says Fertilizer Plant Resumes Operations
By Madelene Pearson
July 15 (Bloomberg) -- Incitec Pivot Ltd., Australia's largest fertilizer maker, said its ammonium phosphate plant in Queensland state returned to operations after repairs that cost less than forecast and were completed ahead of schedule.
Loss of production and the cost of repairs is estimated to cut net income by about A$49 million ($48 million), Melbourne- based Incitec said today in a statement. The company said June 19 repairs may take a month and cut profit as much as A$58 million.
Incitec has more than doubled in the past year as soaring global demand for crop nutrients driven by China pushed fertilizer prices to records, boosting profits for producers. The company was forced to close its Phosphate Hill plant to repair an acid reaction tank, a key part of the production process.
``It's positive coming in A$9 million less than they advised and a week or so early,'' said Hugh Dive, who helps manage $5 billion at Investors Mutual Ltd. in Sydney, including Incitec shares. ``These tons are export tons, because of the time of the year, that are being sold up into Asia when the market is looking tighter.''
Incitec rose as much as A$6.21, or 3.5 percent, to A$184.21 on the exchange and traded at A$181.44 at 12:33 p.m. Sydney time. The stock closed at a record A$199.70 on June 19.
The company may have net income of A$559 million in the year ending Sept. 30, according to the median estimate of seven analysts complied by Bloomberg.
``Working around the clock, Incitec staff and contractors had the plant restored to full operation sooner than anticipated,'' Julian Segal, chief executive officer, said in the statement to the Australian stock exchange.
To contact the reporter on this story: Madelene Pearson in Melbourne on mpearson1@bloomberg.net
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July 15 (Bloomberg) -- Incitec Pivot Ltd., Australia's largest fertilizer maker, said its ammonium phosphate plant in Queensland state returned to operations after repairs that cost less than forecast and were completed ahead of schedule.
Loss of production and the cost of repairs is estimated to cut net income by about A$49 million ($48 million), Melbourne- based Incitec said today in a statement. The company said June 19 repairs may take a month and cut profit as much as A$58 million.
Incitec has more than doubled in the past year as soaring global demand for crop nutrients driven by China pushed fertilizer prices to records, boosting profits for producers. The company was forced to close its Phosphate Hill plant to repair an acid reaction tank, a key part of the production process.
``It's positive coming in A$9 million less than they advised and a week or so early,'' said Hugh Dive, who helps manage $5 billion at Investors Mutual Ltd. in Sydney, including Incitec shares. ``These tons are export tons, because of the time of the year, that are being sold up into Asia when the market is looking tighter.''
Incitec rose as much as A$6.21, or 3.5 percent, to A$184.21 on the exchange and traded at A$181.44 at 12:33 p.m. Sydney time. The stock closed at a record A$199.70 on June 19.
The company may have net income of A$559 million in the year ending Sept. 30, according to the median estimate of seven analysts complied by Bloomberg.
``Working around the clock, Incitec staff and contractors had the plant restored to full operation sooner than anticipated,'' Julian Segal, chief executive officer, said in the statement to the Australian stock exchange.
To contact the reporter on this story: Madelene Pearson in Melbourne on mpearson1@bloomberg.net
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Rio to Spend $500 Million on New Power at Ore Mines
By Rebecca Keenan
July 15 (Bloomberg) -- Rio Tinto Group, the world's third- largest mining company, will spend $500 million upgrading power generation at its iron ore operations in Western Australia, reducing carbon emissions by 25 percent.
Two steam power stations will be shut down and replaced with natural gas turbines, supporting Rio's expansion of production, the London-based company said today in a statement.
Australia is set to release a carbon emissions trading proposal tomorrow as part of a government plan to help reduce greenhouse gases 60 percent by 2050. Western Australia has been battling a natural gas shortage after a plant explosion last month cut supplies by a third.
``At an annual production rate of 220 million tons of iron ore, a rate we expect to reach in the fourth quarter of 2008, we will be saving 200,000 tons a year of greenhouse gas emissions,'' Rio Iron Ore Group Chief Executive Sam Walsh said in the statement to the Australian stock exchange.
Rio fell as much as 1.9 percent, or 1.6 percent, to A$121.62 and was A$122.11 at 2:04 p.m. Sydney time on the exchange.
The turbines will use gas from existing supply agreements with Apache Corp. and the North West Shelf LNG venture, operated by Woodside Petroleum Ltd., Rio spokeswoman Amanda Buckley said from Melbourne. The new power stations will be commissioned in 2010, Rio said.
Rio will also build a power line from the new power station, adjacent to the 7 Mile Rail operations site, to the export ports at Cape Lambert and Dampier.
About 57 percent of gas supply from the damaged Apache plant is expected to resume by mid-August with full capacity expected in December. Rio Tinto said last month iron ore production, the company's biggest source of earnings, won't be affected by the explosion.
To contact the reporter on this story: Rebecca Keenan in Melbourne at rkeenan5@bloomberg.net
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July 15 (Bloomberg) -- Rio Tinto Group, the world's third- largest mining company, will spend $500 million upgrading power generation at its iron ore operations in Western Australia, reducing carbon emissions by 25 percent.
Two steam power stations will be shut down and replaced with natural gas turbines, supporting Rio's expansion of production, the London-based company said today in a statement.
Australia is set to release a carbon emissions trading proposal tomorrow as part of a government plan to help reduce greenhouse gases 60 percent by 2050. Western Australia has been battling a natural gas shortage after a plant explosion last month cut supplies by a third.
``At an annual production rate of 220 million tons of iron ore, a rate we expect to reach in the fourth quarter of 2008, we will be saving 200,000 tons a year of greenhouse gas emissions,'' Rio Iron Ore Group Chief Executive Sam Walsh said in the statement to the Australian stock exchange.
Rio fell as much as 1.9 percent, or 1.6 percent, to A$121.62 and was A$122.11 at 2:04 p.m. Sydney time on the exchange.
The turbines will use gas from existing supply agreements with Apache Corp. and the North West Shelf LNG venture, operated by Woodside Petroleum Ltd., Rio spokeswoman Amanda Buckley said from Melbourne. The new power stations will be commissioned in 2010, Rio said.
Rio will also build a power line from the new power station, adjacent to the 7 Mile Rail operations site, to the export ports at Cape Lambert and Dampier.
About 57 percent of gas supply from the damaged Apache plant is expected to resume by mid-August with full capacity expected in December. Rio Tinto said last month iron ore production, the company's biggest source of earnings, won't be affected by the explosion.
To contact the reporter on this story: Rebecca Keenan in Melbourne at rkeenan5@bloomberg.net
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Gold Trades Little Changed on Weak Dollar, Near Record Oil
By Iris Leung and Feiwen Rong
July 15 (Bloomberg) -- Gold was little changed after reaching its highest in almost four months, on near record oil prices and as deepening losses at U.S. financial institutions caused the dollar to weaken against the yen.
Gold climbed to as high as $975.32 an ounce yesterday, the highest since March 19, on concerns that Israel may be preparing to attack Iran. Crude oil was steady as employees of Petroleo Brasileiro SA, Brazil's state oil company, began a strike in an area, home to more than 80 percent of the country's output.
``Gold prices are still much supported by three factors: the weak dollar, regional instability in the Middle East and the high oil prices,'' said Ellison Chu, manager of precious metals at Standard Bank Asia Ltd. ``It will be testing $995 an ounce in the short term.''
Bullion for immediate delivery traded 0.2 percent lower at $970.25 an ounce at 10:40 a.m. in Hong Kong. Silver lost 0.1 percent to $19.07 an ounce.
The dollar also traded near a two-week low against the yen on speculation losses at Fannie Mae and Freddie Mac will deepen. The currency fell to a 25-year low versus the Australian dollar.
New York crude oil futures traded at $144.78 a barrel in Hong Kong at 10:41 a.m., just below the record $147.27 reached on July 11. The dollar traded at 105.90 yen, down from 106.14 yesterday.
Wealth Creation
``Gold's drivers remain: falling mine production, competitive currency devaluations, wealth creation in India and China, and petrodollars,'' John Hill, analyst at Citigroup Global Markets Inc., said yesterday in a report. ``Gold has reasserted safe-haven status above $950 an ounce as the dollar dithers and oil retakes records near $150.''
Gold for August delivery lost 0.3 percent to $970.90 an ounce in after-hours electronic trading on Comex at 10:45 a.m. in Hong Kong. Gold for December delivery traded in Shanghai advanced for a fourth day, gaining 0.3 percent to 212.93 yuan a gram ($966 an ounce) at the same time.
Gold for June 2009 delivery rose 0.6 percent to 3,335 yen a gram ($979 an ounce) on the Tokyo Commodity Exchange.
To contact the reporters for this story: Iris Leung in Hong Kong at ileung7@bloomberg.net; Feiwen Rong in Singapore at frong2@bloomberg.net
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July 15 (Bloomberg) -- Gold was little changed after reaching its highest in almost four months, on near record oil prices and as deepening losses at U.S. financial institutions caused the dollar to weaken against the yen.
Gold climbed to as high as $975.32 an ounce yesterday, the highest since March 19, on concerns that Israel may be preparing to attack Iran. Crude oil was steady as employees of Petroleo Brasileiro SA, Brazil's state oil company, began a strike in an area, home to more than 80 percent of the country's output.
``Gold prices are still much supported by three factors: the weak dollar, regional instability in the Middle East and the high oil prices,'' said Ellison Chu, manager of precious metals at Standard Bank Asia Ltd. ``It will be testing $995 an ounce in the short term.''
Bullion for immediate delivery traded 0.2 percent lower at $970.25 an ounce at 10:40 a.m. in Hong Kong. Silver lost 0.1 percent to $19.07 an ounce.
The dollar also traded near a two-week low against the yen on speculation losses at Fannie Mae and Freddie Mac will deepen. The currency fell to a 25-year low versus the Australian dollar.
New York crude oil futures traded at $144.78 a barrel in Hong Kong at 10:41 a.m., just below the record $147.27 reached on July 11. The dollar traded at 105.90 yen, down from 106.14 yesterday.
Wealth Creation
``Gold's drivers remain: falling mine production, competitive currency devaluations, wealth creation in India and China, and petrodollars,'' John Hill, analyst at Citigroup Global Markets Inc., said yesterday in a report. ``Gold has reasserted safe-haven status above $950 an ounce as the dollar dithers and oil retakes records near $150.''
Gold for August delivery lost 0.3 percent to $970.90 an ounce in after-hours electronic trading on Comex at 10:45 a.m. in Hong Kong. Gold for December delivery traded in Shanghai advanced for a fourth day, gaining 0.3 percent to 212.93 yuan a gram ($966 an ounce) at the same time.
Gold for June 2009 delivery rose 0.6 percent to 3,335 yen a gram ($979 an ounce) on the Tokyo Commodity Exchange.
To contact the reporters for this story: Iris Leung in Hong Kong at ileung7@bloomberg.net; Feiwen Rong in Singapore at frong2@bloomberg.net
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Corn, Soybeans Rally on Concern Midwest Flooding May Cut Yields
By Jae Hur
July 15 (Bloomberg) -- Corn rose after touching a one-month low and soybeans gained after a U.S. government report showed planting delays and Midwest floods in June slowed pollination and blooming, potentially reducing yields for the crops.
About 13 percent of the corn crop was pollinating as of July 13, down from 50 percent a year earlier and below the five-year average of 36 percent, the U.S. Department of Agriculture said yesterday. An estimated 26 percent of the soybeans were making flower blooms that will develop pods, down from 54 percent a year earlier and below the five-year average of 45 percent, it said.
``There's growing concern that yields of the two crops may decline further following the significantly lower ratings of corn pollination and soybean blooming,'' said Takaki Shigemoto, an analyst at Tokyo-based broker Okachi & Co.
Corn for December delivery was up 2.5 cents, or 0.4 percent, at $6.8475 a bushel at 1:28 p.m. Singapore time after falling to $6.7825 a bushel, the lowest since June 11, in after-hours trading on the Chicago Board of Trade. The contract lost 3.8 percent yesterday as a favorable mix of sunshine and rain may boost crop conditions in the U.S. Midwest.
Most-active futures still have gained 96 percent in the past year, reaching a record $7.9925 on June 27.
About 64 percent of the corn was in good or excellent condition as of July 13, compared with 62 percent a week ago and 64 percent a year earlier, the USDA said yesterday in a report. Some 59 percent of the soybeans got the top ratings, unchanged from a week ago and down from 62 percent a year earlier, it said.
Output Forecast
The corn crop will be 11.715 billion bushels, down 0.2 percent from last month's estimate of 11.735 billion and down 10 percent from a record 13.074 billion harvested last year, the USDA said July 11. The agency cut its forecast for this year's yield to 148.4 bushels an acre from 148.9 bushels a month ago.
This year's soybean crop will total 3 billion bushels, down 3.4 percent from 3.105 billion forecast in June, the USDA said. Yields are projected to fall to 41.6 bushels an acre from 42.1 bushels estimated in June. Inventories before next year's harvest will total 140 million bushels, down 20 percent the June forecast.
Soybeans for November delivery rose 8.5 cents, or 0.6 percent, to $15.675 a bushel at 1:30 p.m. Singapore time after trading between $15.5225 and $15.70. The contract fell 2.3 percent yesterday. Most-active futures have risen 80 percent in the past year, reaching a record $16.3675 on July 3.
``Although soybeans prices have been pressured lower by the improvement in Midwest weather, we believe there is less downside risk to soybean prices given the underlying supply-demand fundamentals,'' Toby Hassall, an analyst at Commodity Warrants Australia in Sydney, said in an e-mail.
Wheat Gains
Wheat for September delivery was up 5 cents, or 0.6 percent, at $8.23 a bushel at 1:14 p.m. Singapore time after declining 1.5 percent yesterday. Prices have slumped 39 percent from a record $13.495 set on Feb. 27 as higher prices spurred farmers to boost planting.
Some 61 percent of the U.S. spring-wheat crop was rated good or excellent as of July 13, down from 69 percent a week earlier, the USDA said. Temperatures were as much as 4 degrees Fahrenheit warmer than normal in parts of North Dakota and Minnesota, hurting plants that were sown late because of wet weather.
To contact the reporter on this story: Jae Hur in Singapore at jhur1@bloomberg.net
Last Updated: July 15, 2008 02:15 EDT
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July 15 (Bloomberg) -- Corn rose after touching a one-month low and soybeans gained after a U.S. government report showed planting delays and Midwest floods in June slowed pollination and blooming, potentially reducing yields for the crops.
About 13 percent of the corn crop was pollinating as of July 13, down from 50 percent a year earlier and below the five-year average of 36 percent, the U.S. Department of Agriculture said yesterday. An estimated 26 percent of the soybeans were making flower blooms that will develop pods, down from 54 percent a year earlier and below the five-year average of 45 percent, it said.
``There's growing concern that yields of the two crops may decline further following the significantly lower ratings of corn pollination and soybean blooming,'' said Takaki Shigemoto, an analyst at Tokyo-based broker Okachi & Co.
Corn for December delivery was up 2.5 cents, or 0.4 percent, at $6.8475 a bushel at 1:28 p.m. Singapore time after falling to $6.7825 a bushel, the lowest since June 11, in after-hours trading on the Chicago Board of Trade. The contract lost 3.8 percent yesterday as a favorable mix of sunshine and rain may boost crop conditions in the U.S. Midwest.
Most-active futures still have gained 96 percent in the past year, reaching a record $7.9925 on June 27.
About 64 percent of the corn was in good or excellent condition as of July 13, compared with 62 percent a week ago and 64 percent a year earlier, the USDA said yesterday in a report. Some 59 percent of the soybeans got the top ratings, unchanged from a week ago and down from 62 percent a year earlier, it said.
Output Forecast
The corn crop will be 11.715 billion bushels, down 0.2 percent from last month's estimate of 11.735 billion and down 10 percent from a record 13.074 billion harvested last year, the USDA said July 11. The agency cut its forecast for this year's yield to 148.4 bushels an acre from 148.9 bushels a month ago.
This year's soybean crop will total 3 billion bushels, down 3.4 percent from 3.105 billion forecast in June, the USDA said. Yields are projected to fall to 41.6 bushels an acre from 42.1 bushels estimated in June. Inventories before next year's harvest will total 140 million bushels, down 20 percent the June forecast.
Soybeans for November delivery rose 8.5 cents, or 0.6 percent, to $15.675 a bushel at 1:30 p.m. Singapore time after trading between $15.5225 and $15.70. The contract fell 2.3 percent yesterday. Most-active futures have risen 80 percent in the past year, reaching a record $16.3675 on July 3.
``Although soybeans prices have been pressured lower by the improvement in Midwest weather, we believe there is less downside risk to soybean prices given the underlying supply-demand fundamentals,'' Toby Hassall, an analyst at Commodity Warrants Australia in Sydney, said in an e-mail.
Wheat Gains
Wheat for September delivery was up 5 cents, or 0.6 percent, at $8.23 a bushel at 1:14 p.m. Singapore time after declining 1.5 percent yesterday. Prices have slumped 39 percent from a record $13.495 set on Feb. 27 as higher prices spurred farmers to boost planting.
Some 61 percent of the U.S. spring-wheat crop was rated good or excellent as of July 13, down from 69 percent a week earlier, the USDA said. Temperatures were as much as 4 degrees Fahrenheit warmer than normal in parts of North Dakota and Minnesota, hurting plants that were sown late because of wet weather.
To contact the reporter on this story: Jae Hur in Singapore at jhur1@bloomberg.net
Last Updated: July 15, 2008 02:15 EDT
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Crude Oil Is Steady Near $145 as Brazil's Supply Is Disrupted
By Nesa Subrahmaniyan
July 15 (Bloomberg) -- Crude oil traded little changed near $145 a barrel in New York as production in Brazil was disrupted after a strike by employees of state oil company Petroleo Brasileiro SA.
Oil rose as high as $146.37 a barrel yesterday as employees of Petrobras began a five-day strike in an area home to more than 80 percent of the country's output. At 5 a.m. Singapore time output was 63,000 barrels a day below full capacity, Petrobras said in an e-mailed statement.
``It's just another supply problem the world doesn't need now,'' said Anthony Nunan, Tokyo-based assistant general manager for risk management at Mitsubishi Corp. ``Supply issues are keeping the market buoyant.''
Crude oil for August delivery fell 25 cents to $144.93 a barrel at 1:47 p.m. Singapore time in electronic trading on the New York Mercantile Exchange. Yesterday, it rose 10 cents to settle at $145.18 a barrel. Futures reached a record $147.27 a barrel on July 11 and have risen 96 percent in the past year.
Petrobras has lost about 400,000 barrels a day of output because of the strike in the Campos Basin, the source of about 82 percent of Brazil's production of 1.8 million barrels a day, the country's main oil union said yesterday. The company said it is pumping crude from all but two of 38 offshore platforms affected by the strike.
Petrobras exports some of the heavy crude oil from Campos because its refineries aren't fully equipped to handle these grades. It uses the proceeds to buy lighter oil from abroad.
Iran Standoff
Crude oil may trade above $140 a barrel amid ``ongoing tensions in the Middle East'' as Iran defies United Nations efforts to halt its nuclear program, said David Moore, commodity strategist at Commonwealth Bank Australia in Sydney.
Israeli war planes have practiced over Iraq for an attack on Iran's nuclear research facility, according to the Jerusalem Post. Iran as part of war games test-fired missiles capable of reaching Israel, according to state media reports.
Iran, the Middle East's second-biggest producer, said yesterday it will reject any proposal to halt its nuclear program that might be offered at a weekend European Union summit, the Associated Press reported.
The meeting in Geneva will instead focus on ``common'' points, Iranian President Mahmoud Ahmadinejad said on state television, according to AP.
Saeed Jalili, Iran's top nuclear negotiator, will meet with EU foreign policy chief Javier Solana on July 19 in the Swiss city, AP said.
Dollar Weakens
The dollar fell against the yen and euro on speculation Federal Reserve Chairman Ben S. Bernanke and U.S. Treasury Secretary Henry Paulson will tell lawmakers credit-market losses will weigh on U.S. economic growth.
The dollar declined to 105.86 yen as of 12:37 p.m. in Singapore from 106.14 yen in New York yesterday. It weakened to $1.5942 per euro from $1.5908. It fell to within a cent of the record low of $1.6019 reached April 22.
U.S. crude-oil supplies probably fell as record prices discouraged buying by refiners, according to a Bloomberg News survey of analysts.
Supplies of crude declined 2 million barrels in the week ended July 11 from 293.9 million, according to the median of responses by six analysts before an Energy Department report July 16. Four forecast a drop, and two expected a gain. Supplies fell 5.84 million barrels in last week's report, double the forecast.
Gasoline stockpiles probably gained 500,000 barrels from 211.8 million barrels the week before, the survey showed. Four analysts predicted a rise and two a decline.
Inventories of distillate fuel, including heating oil and diesel, probably rose 2 million barrels from 122.5 million barrels the week before. All the analysts predicted an increase.
Refineries probably operated at 89.3 percent of capacity, up 0.1 percentage point from the week before, the survey showed.
Atlantic Storm
Tropical Storm Bertha lashed Bermuda with rain and threatened to strengthen into a hurricane as it moved away from the islands. In the Pacific, Hurricane Elida was forecast to weaken off Mexico's west coast.
Bertha, with maximum sustained winds of almost 70 miles (110 kilometers) per hour, was about 120 miles north-northeast of Bermuda, the National Hurricane Center said in an advisory issued at 11 p.m. New York time yesterday. As much as 2 inches of rain may fall on the islands in coming days, while ``large swells and high surf'' are forecast to decrease.
Bertha may strengthen into a hurricane today as it moves north-northeast at almost 9 miles per hour, the Miami-based center said. A storm becomes a hurricane when winds reach 74 miles per hour.
Brent crude oil for August settlement fell 1 cent to $143.91 a barrel at 1:37 p.m. Singapore time on London's ICE Futures Europe exchange. The August contract, which expires tomorrow, reached a record $147.50 on July 11. The more-widely held September contract fell 8 cents to $145.25 a barrel.
To contact the reporter on this story: Nesa Subrahmaniyan in Singapore at nesas@bloomberg.net
Read more...
July 15 (Bloomberg) -- Crude oil traded little changed near $145 a barrel in New York as production in Brazil was disrupted after a strike by employees of state oil company Petroleo Brasileiro SA.
Oil rose as high as $146.37 a barrel yesterday as employees of Petrobras began a five-day strike in an area home to more than 80 percent of the country's output. At 5 a.m. Singapore time output was 63,000 barrels a day below full capacity, Petrobras said in an e-mailed statement.
``It's just another supply problem the world doesn't need now,'' said Anthony Nunan, Tokyo-based assistant general manager for risk management at Mitsubishi Corp. ``Supply issues are keeping the market buoyant.''
Crude oil for August delivery fell 25 cents to $144.93 a barrel at 1:47 p.m. Singapore time in electronic trading on the New York Mercantile Exchange. Yesterday, it rose 10 cents to settle at $145.18 a barrel. Futures reached a record $147.27 a barrel on July 11 and have risen 96 percent in the past year.
Petrobras has lost about 400,000 barrels a day of output because of the strike in the Campos Basin, the source of about 82 percent of Brazil's production of 1.8 million barrels a day, the country's main oil union said yesterday. The company said it is pumping crude from all but two of 38 offshore platforms affected by the strike.
Petrobras exports some of the heavy crude oil from Campos because its refineries aren't fully equipped to handle these grades. It uses the proceeds to buy lighter oil from abroad.
Iran Standoff
Crude oil may trade above $140 a barrel amid ``ongoing tensions in the Middle East'' as Iran defies United Nations efforts to halt its nuclear program, said David Moore, commodity strategist at Commonwealth Bank Australia in Sydney.
Israeli war planes have practiced over Iraq for an attack on Iran's nuclear research facility, according to the Jerusalem Post. Iran as part of war games test-fired missiles capable of reaching Israel, according to state media reports.
Iran, the Middle East's second-biggest producer, said yesterday it will reject any proposal to halt its nuclear program that might be offered at a weekend European Union summit, the Associated Press reported.
The meeting in Geneva will instead focus on ``common'' points, Iranian President Mahmoud Ahmadinejad said on state television, according to AP.
Saeed Jalili, Iran's top nuclear negotiator, will meet with EU foreign policy chief Javier Solana on July 19 in the Swiss city, AP said.
Dollar Weakens
The dollar fell against the yen and euro on speculation Federal Reserve Chairman Ben S. Bernanke and U.S. Treasury Secretary Henry Paulson will tell lawmakers credit-market losses will weigh on U.S. economic growth.
The dollar declined to 105.86 yen as of 12:37 p.m. in Singapore from 106.14 yen in New York yesterday. It weakened to $1.5942 per euro from $1.5908. It fell to within a cent of the record low of $1.6019 reached April 22.
U.S. crude-oil supplies probably fell as record prices discouraged buying by refiners, according to a Bloomberg News survey of analysts.
Supplies of crude declined 2 million barrels in the week ended July 11 from 293.9 million, according to the median of responses by six analysts before an Energy Department report July 16. Four forecast a drop, and two expected a gain. Supplies fell 5.84 million barrels in last week's report, double the forecast.
Gasoline stockpiles probably gained 500,000 barrels from 211.8 million barrels the week before, the survey showed. Four analysts predicted a rise and two a decline.
Inventories of distillate fuel, including heating oil and diesel, probably rose 2 million barrels from 122.5 million barrels the week before. All the analysts predicted an increase.
Refineries probably operated at 89.3 percent of capacity, up 0.1 percentage point from the week before, the survey showed.
Atlantic Storm
Tropical Storm Bertha lashed Bermuda with rain and threatened to strengthen into a hurricane as it moved away from the islands. In the Pacific, Hurricane Elida was forecast to weaken off Mexico's west coast.
Bertha, with maximum sustained winds of almost 70 miles (110 kilometers) per hour, was about 120 miles north-northeast of Bermuda, the National Hurricane Center said in an advisory issued at 11 p.m. New York time yesterday. As much as 2 inches of rain may fall on the islands in coming days, while ``large swells and high surf'' are forecast to decrease.
Bertha may strengthen into a hurricane today as it moves north-northeast at almost 9 miles per hour, the Miami-based center said. A storm becomes a hurricane when winds reach 74 miles per hour.
Brent crude oil for August settlement fell 1 cent to $143.91 a barrel at 1:37 p.m. Singapore time on London's ICE Futures Europe exchange. The August contract, which expires tomorrow, reached a record $147.50 on July 11. The more-widely held September contract fell 8 cents to $145.25 a barrel.
To contact the reporter on this story: Nesa Subrahmaniyan in Singapore at nesas@bloomberg.net
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Colbun, Gol, Lupatech, Modelo, Petrobras: Latin Equity Preview
By William Freebairn and Paulo Winterstein
July 15 (Bloomberg) -- The following stocks may have significant gains or losses in Latin American markets. Symbols are in parentheses after company names, and stock prices are from the last session.
The MSCI index of Latin American shares rose 1 percent to 4,387.42 yesterday. In Brazil, preferred shares are the most commonly traded class of stock.
Brazil
Gol Linhas Aereas Inteligentes SA (GOLL4 BS): Brazil's second-biggest airline signed an agreement with Emirates Airline's cargo division allowing the companies to deliver cargo to all locations served by the two companies, Gol said yesterday in a statement distributed by PR Newswire. Gol fell 4.8 percent to 12.97 reais.
Lupatech SA (LUPA3 BS): The Brazilian maker of parts for oil and gas industries agreed to pay about 61.7 million reais ($38.7 million) for valve maker Tecval SA Valvulas Industriais. Caxias do Sul, Brazil-based Lupatech expects to add about 18 million reais in earnings before interest, taxes, depreciation and amortization after the acquisition, the company said yesterday in a regulatory filing. Lupatech fell 0.3 percent to 57.24 reais.
Petroleo Brasileiro SA (PETR4 BS): Brazil's state-controlled oil company said yesterday output in the Campos Basin has returned to 96 percent of capacity as an oil-platform worker strike continues. The strike, which began yesterday, has reduced output by 63,000 barrels a day. Petrobras added 0.7 percent to 40.88 reais.
Chile
Colbun SA (COLBUN CC): The electricity generator controlled by Chile's Matte group was raised to ``buy'' from ``hold'' by Banco Santander SA. Colbun plans to increase its generating capacity by 90 percent and recent rains have reduced costs, analysts Diego Celedon and Marcio Prado wrote in a research report sent yesterday. Colbun rose 1.6 percent to 96.50 pesos.
Empresa Nacional de Electricidad SA (ENDESA CC): Chile's biggest electricity producer is Banco Santander SA's preferred utility in the country. Endesa, as the company is known, is expanding capacity and will have the best earnings in the industry, Santander said in a report e-mailed yesterday. Endesa fell 0.4 percent to 694.51 pesos.
Mexico
Grupo Modelo SAB (GMODELOC MM): Controlling shareholders of Mexico's largest brewer may have missed an opportunity to sell their stake at ``a significant premium'' Credit Suisse analysts including Tufic Salem wrote in a research note e-mailed yesterday. InBev NV agreed yesterday to buy Anheuser Busch Cos., the U.S. brewer that has about a 50 percent non-controlling stake in Modelo. The transaction may have happened too quickly for Modelo to respond, Credit Suisse said. Modelo fell 0.9 percent to 51.07 pesos.
Grupo TMM SA (TMMA MM): The Mexican transportation company's offer to lease five tankers to a unit of government-owned Petroleos Mexicanos was rejected. The contract will be bid again ``shortly,'' the oil company said in a statement e-mailed yesterday. TMM fell 5.4 percent to 17.60 pesos when it last traded July 11.
To contact the reporters on this story: William Freebairn in Mexico City at wfreebairn@bloomberg.net; Paulo Winterstein in Sao Paulo at pwinterstein@bloomberg.net.
Read more...
July 15 (Bloomberg) -- The following stocks may have significant gains or losses in Latin American markets. Symbols are in parentheses after company names, and stock prices are from the last session.
The MSCI index of Latin American shares rose 1 percent to 4,387.42 yesterday. In Brazil, preferred shares are the most commonly traded class of stock.
Brazil
Gol Linhas Aereas Inteligentes SA (GOLL4 BS): Brazil's second-biggest airline signed an agreement with Emirates Airline's cargo division allowing the companies to deliver cargo to all locations served by the two companies, Gol said yesterday in a statement distributed by PR Newswire. Gol fell 4.8 percent to 12.97 reais.
Lupatech SA (LUPA3 BS): The Brazilian maker of parts for oil and gas industries agreed to pay about 61.7 million reais ($38.7 million) for valve maker Tecval SA Valvulas Industriais. Caxias do Sul, Brazil-based Lupatech expects to add about 18 million reais in earnings before interest, taxes, depreciation and amortization after the acquisition, the company said yesterday in a regulatory filing. Lupatech fell 0.3 percent to 57.24 reais.
Petroleo Brasileiro SA (PETR4 BS): Brazil's state-controlled oil company said yesterday output in the Campos Basin has returned to 96 percent of capacity as an oil-platform worker strike continues. The strike, which began yesterday, has reduced output by 63,000 barrels a day. Petrobras added 0.7 percent to 40.88 reais.
Chile
Colbun SA (COLBUN CC): The electricity generator controlled by Chile's Matte group was raised to ``buy'' from ``hold'' by Banco Santander SA. Colbun plans to increase its generating capacity by 90 percent and recent rains have reduced costs, analysts Diego Celedon and Marcio Prado wrote in a research report sent yesterday. Colbun rose 1.6 percent to 96.50 pesos.
Empresa Nacional de Electricidad SA (ENDESA CC): Chile's biggest electricity producer is Banco Santander SA's preferred utility in the country. Endesa, as the company is known, is expanding capacity and will have the best earnings in the industry, Santander said in a report e-mailed yesterday. Endesa fell 0.4 percent to 694.51 pesos.
Mexico
Grupo Modelo SAB (GMODELOC MM): Controlling shareholders of Mexico's largest brewer may have missed an opportunity to sell their stake at ``a significant premium'' Credit Suisse analysts including Tufic Salem wrote in a research note e-mailed yesterday. InBev NV agreed yesterday to buy Anheuser Busch Cos., the U.S. brewer that has about a 50 percent non-controlling stake in Modelo. The transaction may have happened too quickly for Modelo to respond, Credit Suisse said. Modelo fell 0.9 percent to 51.07 pesos.
Grupo TMM SA (TMMA MM): The Mexican transportation company's offer to lease five tankers to a unit of government-owned Petroleos Mexicanos was rejected. The contract will be bid again ``shortly,'' the oil company said in a statement e-mailed yesterday. TMM fell 5.4 percent to 17.60 pesos when it last traded July 11.
To contact the reporters on this story: William Freebairn in Mexico City at wfreebairn@bloomberg.net; Paulo Winterstein in Sao Paulo at pwinterstein@bloomberg.net.
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Alimentation Couche-Tard, Scotiabank: Canadian Equity Preview
By John Kipphoff
July 15 (Bloomberg) -- The following companies may have unusual price changes in Canada trading. Stock symbols are in parentheses, and share prices are from the previous close.
The Standard & Poor's/TSX Composite Index rose 0.2 percent to 13,741.29.
Alimentation Couche-Tard Inc. (ATD/B CN): The second-biggest North American convenience-store operator may report fourth- quarter profit of 13 cents a share before some items, the average estimate of nine analysts in a Bloomberg survey. The shares fell 0.8 percent to C$11.80.
Bank of Nova Scotia (BNS CN): Canada's third-biggest bank agreed to pay $442 million for E*Trade Financial Corp.'s (ETFC US) Canadian unit to double its online-brokerage business. The shares fell 3.6 percent to C$43.82.
To contact the reporter on this story: John Kipphoff in Toronto at jkipphoff@bloomberg.net.
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July 15 (Bloomberg) -- The following companies may have unusual price changes in Canada trading. Stock symbols are in parentheses, and share prices are from the previous close.
The Standard & Poor's/TSX Composite Index rose 0.2 percent to 13,741.29.
Alimentation Couche-Tard Inc. (ATD/B CN): The second-biggest North American convenience-store operator may report fourth- quarter profit of 13 cents a share before some items, the average estimate of nine analysts in a Bloomberg survey. The shares fell 0.8 percent to C$11.80.
Bank of Nova Scotia (BNS CN): Canada's third-biggest bank agreed to pay $442 million for E*Trade Financial Corp.'s (ETFC US) Canadian unit to double its online-brokerage business. The shares fell 3.6 percent to C$43.82.
To contact the reporter on this story: John Kipphoff in Toronto at jkipphoff@bloomberg.net.
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Intel Sales Slowdown May Signal End of Growth-Company Status
By Ian King
July 15 (Bloomberg) -- Intel Corp.'s quarterly sales gain may slow to its lowest level in a year, signaling the world's largest chipmaker is losing its status as a growth company.
Intel probably will report sales increased 7 percent for the second quarter, according to a Bloomberg survey of 28 analysts, down from an average of 12 percent for the previous three quarters. Sales will rise an estimated 4 percent for the year, half the rate in 2007, the survey showed.
Prices for personal-computer processors, the source of most of Santa Clara, California-based Intel's sales, dropped 20 percent between 2004 and 2007, according to Mercury Research. That curbed sales growth, which had averaged about 25 percent a year from 1990 to 2000 as PCs became household items.
``Going back to double-digit growth is going to be difficult,'' said Tristan Gerra, an analyst at Robert W. Baird & Co. in Milwaukee. He has a neutral rating on the stock, which he doesn't own.
Chief Executive Officer Paul Otellini boosted profitability 38 percent last year after taking market share from Advanced Micro Devices Inc. and saving more than $1 billion in annual costs by cutting jobs and selling off businesses. The stock has fallen 23 percent this year as investors wait for him to reignite growth by breaking into new businesses.
The drop compares with a 16 percent decline by the 18-member Philadelphia Semiconductor Index and a 17 percent loss by the Dow Jones Industrial Average.
Analysts anticipate a profit of 26 cents a share on sales of $9.33 billion when Intel announces results after the market closes today, according to the Bloomberg survey.
Tom Beermann, an Intel spokesman, declined to comment.
Four Targets
Otellini, 57, said at the company's shareholder meeting in May that Intel is banking on advanced mobile phones, cheaper computers, industrial and automotive machinery, and home electronics to revive growth. Each will generate $10 billion a year for processor makers by 2011, he said.
Intel plans to create a new market for inexpensive PCs with a processor called Atom. In June, the chip began appearing in laptops that sell for as little as $250. Reaching lower-income buyers may be Otellini's best chance to fuel sales, said Bill Gorman, an analyst at PNC Institutional Investments in Pittsburgh.
``The PC market isn't stale yet,'' said Gorman, whose firm owns 10.9 million Intel shares, according to data compiled by Bloomberg. ``That market still has some legs to it, and they could maybe grow a little at the edges.''
Dominant Share
Global PC shipments will rise 15 percent to 310 million units this year, according to research firm IDC. The Framingham, Massachusetts-based company expects percentage growth to remain above 10 percent until 2010.
Intel ended the first quarter with 78.5 percent of PC processor sales, according to Cave Creek, Arizona-based Mercury Research. AMD accounted for most of the rest of the market.
Increases in unit sales have been offset by a 6 percent annual decline in the average selling price of chips, Otellini told investors at a Sanford C. Bernstein conference in May, suggesting that Intel needs new markets to revive revenue.
Otellini is spending 20 percent of Intel's $6 billion research and development budget to move into new businesses. After this year's 4 percent increase, revenue will rise 7 percent in 2009 and 5 percent in 2010, according to analysts' estimates.
``They haven't made any material progress'' in boosting sales growth, said Gus Richard, a San Francisco-based analyst at Piper Jaffray Cos. who has a neutral rating on the stock.
Failed Attempts
Intel's attempt to challenge Texas Instruments Inc. and Qualcomm Inc. in telecommunications chips cost about $5 billion and ended in the sale of the unit for about a 10th of that amount in 2006.
A venture with Micron Technology Inc. in flash chips, which store data in portable devices, is entering full production just as the industry reels from a product glut. Boise, Idaho-based Micron reported a wider quarterly loss last month and said prices of so-called Nand flash memory, used inside music players and cameras, have dropped 20 percent.
``They've been in telecom, and that didn't work,'' Gorman said. ``Now they're in Nand flash, and that isn't working.''
Intel isn't interested in becoming a mature company that only attracts investors with dividends and stock buybacks, Otellini said at the Bernstein conference. He said he spends less than an hour a year wondering if he should reduce spending aimed at spurring sales.
``Our focus is on growth,'' he said.
The Atom chip may be the breakthrough the company needs to cultivate a new market, said Highmark Capital Management Chief Investment Officer David Goerz, who manages $22 billion, including Intel shares. The product lets the company tap booming sales of inexpensive portable devices overseas, he said.
``Intel's been a one-trick pony for a long time and now I see them with an opportunity to be a two-trick pony,'' said Goerz, who is based in San Francisco. ``They are one of the best positioned technology companies to profit from global growth.''
To contact the reporter on this story: Ian King in San Francisco at ianking@bloomberg.net
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Credit Agricole SA, EADS, H&M, Roche: European Equity Preview
By Nadja Brandt
July 15 (Bloomberg) -- The following companies may have unusual price changes in European trading. Stock symbols are in parentheses, and share prices are from the previous close.
The Dow Jones Stoxx 600 climbed 0.8 percent to 272.47. The Dow Jones Stoxx 50 Index added 0.5 percent to 2,770.39. The Euro Stoxx 50 Index, a benchmark for the nations using the euro, increased 0.6 percent to 3,216.24.
Credit Agricole SA (ACA FP): The board of France's second- largest bank will meet to discuss whether to remove Georges Pauget from the chief executive officer post, which he has held since September 2005, four people with knowledge of the meeting said. Credit Agricole rose 29 cents, or 2.5 percent, to 11.86 euros.
European Aeronautic, Defence & Space Co. (EAD FP): EADS's Airbus SAS, the world's biggest planemaker, won an order for 55 airliners, including A380 superjumbos, from Gulf carrier Etihad Airways worth about $11 billion at list prices. EADS rose 66 cents, or 6.2 percent, to 11.40 euros.
Finmeccanica SpA (FNC IM): The Italian state-controlled defense company said banks offered to loan it more than twice the amount it needs to complete the acquisition of U.S.-based DRS Technologies Inc. The stock rose 34 cents, or 2 percent, to 16.77 euros.
Gerresheimer AG (GXI GY): The medical packaging company that sold shares for the first time last year plans to post second- quarter results. The company in April reported a first-quarter profit after sales at its life science and pharmaceuticals units rose. The shares added 56 cents, or 1.8 percent, to 32.20 euros.
Hennes & Mauritz AB (HMB SS): Europe's second-biggest clothing retailer may say total June sales gained 5.3 percent, while revenue from comparable stores declined 5.6 percent, according to the average analyst estimates collected by SME Direkt. H&M advanced 1.1 percent to 287 kronor.
Iberia Lineas Aereas de Espana SA (IBLA SM): Spain's biggest airline said passenger traffic fell 2.3 percent in June as demand fell on routes in Spain and to South America. The shares slipped 3 cents, or 2.2 percent, to 1.33 euros.
Jelmoli Holding AG (JEL SW): The Swiss department-store and real-estate owner reports sales for the first half of the year. The shares rose 10 francs, or 0.4 percent, to 2,519 francs.
Micronas Semiconductor Holding AG (MASN SW): Switzerland's biggest maker of computer chips reports second-quarter earnings. The shares were unchanged at 6.45 francs.
Roche Holding AG (ROG VX): Roche's Genentech Inc., the biggest U.S. maker of cancer drugs, raised its 2008 forecast and said second-quarter profit increased 4.7 percent on higher sales of its Avastin treatment for colon, lung and breast tumors. Also, Roche's U.K. unit was suspended by the Association of the British Pharmaceutical Industry for at least six months for violating the group's code of practice. The shares rose 1.7 francs, or 0.9 percent, to 182 francs.
Sulzer AG (SUN SW): The world's second-biggest maker of pumps may say first-half order intake rose 7.5 percent to 2.29 billion Swiss francs ($2.24 billion), according to the median estimate of four analysts surveyed by Bloomberg. The shares rose 3.6 francs, or 3 percent, to 125.6 francs.
Union Fenosa SA (UNF SM): Spain's third-largest power company may say second-quarter profit rose 2.1 percent to 188 million euros ($299 million), according to the median estimate of five analysts surveyed by Bloomberg News. The shares added 1.7 cents, or 0.2 percent, to 11.05 euros.
To contact the reporter on this story: Nadja Brandt in Los Angeles at nbrandt@bloomberg.net.
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July 15 (Bloomberg) -- The following companies may have unusual price changes in European trading. Stock symbols are in parentheses, and share prices are from the previous close.
The Dow Jones Stoxx 600 climbed 0.8 percent to 272.47. The Dow Jones Stoxx 50 Index added 0.5 percent to 2,770.39. The Euro Stoxx 50 Index, a benchmark for the nations using the euro, increased 0.6 percent to 3,216.24.
Credit Agricole SA (ACA FP): The board of France's second- largest bank will meet to discuss whether to remove Georges Pauget from the chief executive officer post, which he has held since September 2005, four people with knowledge of the meeting said. Credit Agricole rose 29 cents, or 2.5 percent, to 11.86 euros.
European Aeronautic, Defence & Space Co. (EAD FP): EADS's Airbus SAS, the world's biggest planemaker, won an order for 55 airliners, including A380 superjumbos, from Gulf carrier Etihad Airways worth about $11 billion at list prices. EADS rose 66 cents, or 6.2 percent, to 11.40 euros.
Finmeccanica SpA (FNC IM): The Italian state-controlled defense company said banks offered to loan it more than twice the amount it needs to complete the acquisition of U.S.-based DRS Technologies Inc. The stock rose 34 cents, or 2 percent, to 16.77 euros.
Gerresheimer AG (GXI GY): The medical packaging company that sold shares for the first time last year plans to post second- quarter results. The company in April reported a first-quarter profit after sales at its life science and pharmaceuticals units rose. The shares added 56 cents, or 1.8 percent, to 32.20 euros.
Hennes & Mauritz AB (HMB SS): Europe's second-biggest clothing retailer may say total June sales gained 5.3 percent, while revenue from comparable stores declined 5.6 percent, according to the average analyst estimates collected by SME Direkt. H&M advanced 1.1 percent to 287 kronor.
Iberia Lineas Aereas de Espana SA (IBLA SM): Spain's biggest airline said passenger traffic fell 2.3 percent in June as demand fell on routes in Spain and to South America. The shares slipped 3 cents, or 2.2 percent, to 1.33 euros.
Jelmoli Holding AG (JEL SW): The Swiss department-store and real-estate owner reports sales for the first half of the year. The shares rose 10 francs, or 0.4 percent, to 2,519 francs.
Micronas Semiconductor Holding AG (MASN SW): Switzerland's biggest maker of computer chips reports second-quarter earnings. The shares were unchanged at 6.45 francs.
Roche Holding AG (ROG VX): Roche's Genentech Inc., the biggest U.S. maker of cancer drugs, raised its 2008 forecast and said second-quarter profit increased 4.7 percent on higher sales of its Avastin treatment for colon, lung and breast tumors. Also, Roche's U.K. unit was suspended by the Association of the British Pharmaceutical Industry for at least six months for violating the group's code of practice. The shares rose 1.7 francs, or 0.9 percent, to 182 francs.
Sulzer AG (SUN SW): The world's second-biggest maker of pumps may say first-half order intake rose 7.5 percent to 2.29 billion Swiss francs ($2.24 billion), according to the median estimate of four analysts surveyed by Bloomberg. The shares rose 3.6 francs, or 3 percent, to 125.6 francs.
Union Fenosa SA (UNF SM): Spain's third-largest power company may say second-quarter profit rose 2.1 percent to 188 million euros ($299 million), according to the median estimate of five analysts surveyed by Bloomberg News. The shares added 1.7 cents, or 0.2 percent, to 11.05 euros.
To contact the reporter on this story: Nadja Brandt in Los Angeles at nbrandt@bloomberg.net.
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BP, Burberry, Speedy Hire, Xstrata: U.K., Irish Equity Preview
By Lenka Ponikelska
July 15 (Bloomberg) -- The following is a list of companies whose shares may have unusual price changes in U.K. markets today. Stock symbols are in parentheses and prices are from the last market close.
The benchmark FTSE 100 Index added 38.8, or 0.74 percent, to 5,300.4. The FTSE All-Share Index rose 21.16, or 0.8 percent, to 2,682.02. Ireland's ISEQ Index advanced 84.31, or 1.9 percent, to 4,499.11.
U.K. Companies:
Alliance & Leicester Plc (AL/ LN): The company's shareholders sought a rival bid after the lender agreed to be bought by Banco Santander SA for 1.26 billion pounds ($2.5 billion), seven months after it gave up a deal with the Spanish bank that valued it at more than twice as much, the Financial Times reported. The stock added 115.75 pence, or 52.8 percent, to 335.
BP Plc (BP/ LN): A group of Russian shareholders said they are willing to buy BP's 50 percent stake in TNK-BP Holding, as the two sides battle for control of the Russian oil producer. The shares rose 0.25 pence, or less than 0.1 percent, to 539.
Burberry Group Plc (BRBY LN): The maker of $2,195 metal- studded Warrior handbags may report an increase in first-quarter sales tomorrow after shoppers bought more of its luxury bags and new stores opened. The shares advanced 5.75 pence, or 1.5 percent, to 397.
Premier Foods Plc (PFD LN): The second-largest U.K. bread baker is reporting results. The shares added 3 pence, or 4.1 percent, to 76.
Speedy Hire Plc (SDY LN): The U.K.'s largest tool-rental company is releasing results. The stock fell 20 pence, or 4.6 percent, to 415.75.
Taylor Nelson Sofres (TNS LN): GfK AG, a German market- research company, has been in talks with Cinven Ltd., the private-equity firm behind Gala Coral Group Ltd. and Axel Springer AG, about financing a joint bid for Taylor Nelson Sofres, the Daily Telegraph said, citing an unidentified person familiar with the matter. The stock declined 6.5 pence, or 2.4 percent, to 269.25.
Trikona Capital (TRC LN): The U.K.-based fund that invests in Indian property is releasing results. The shares remained unchanged at 74.5.
Xstrata Plc (XTA LN): Teck Cominco Ltd. and Xstrata will close the joint-venture Lennard Shelf Pillara zinc mine in Western Australia earlier than planned because of a decline in zinc prices and the rising Australian dollar. The shares rose 101 pence, or 2.7 percent, to 3,880.
To contact the reporter on this story: Lenka Ponikelska in London lponikelska1@bloomberg.net
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July 15 (Bloomberg) -- The following is a list of companies whose shares may have unusual price changes in U.K. markets today. Stock symbols are in parentheses and prices are from the last market close.
The benchmark FTSE 100 Index added 38.8, or 0.74 percent, to 5,300.4. The FTSE All-Share Index rose 21.16, or 0.8 percent, to 2,682.02. Ireland's ISEQ Index advanced 84.31, or 1.9 percent, to 4,499.11.
U.K. Companies:
Alliance & Leicester Plc (AL/ LN): The company's shareholders sought a rival bid after the lender agreed to be bought by Banco Santander SA for 1.26 billion pounds ($2.5 billion), seven months after it gave up a deal with the Spanish bank that valued it at more than twice as much, the Financial Times reported. The stock added 115.75 pence, or 52.8 percent, to 335.
BP Plc (BP/ LN): A group of Russian shareholders said they are willing to buy BP's 50 percent stake in TNK-BP Holding, as the two sides battle for control of the Russian oil producer. The shares rose 0.25 pence, or less than 0.1 percent, to 539.
Burberry Group Plc (BRBY LN): The maker of $2,195 metal- studded Warrior handbags may report an increase in first-quarter sales tomorrow after shoppers bought more of its luxury bags and new stores opened. The shares advanced 5.75 pence, or 1.5 percent, to 397.
Premier Foods Plc (PFD LN): The second-largest U.K. bread baker is reporting results. The shares added 3 pence, or 4.1 percent, to 76.
Speedy Hire Plc (SDY LN): The U.K.'s largest tool-rental company is releasing results. The stock fell 20 pence, or 4.6 percent, to 415.75.
Taylor Nelson Sofres (TNS LN): GfK AG, a German market- research company, has been in talks with Cinven Ltd., the private-equity firm behind Gala Coral Group Ltd. and Axel Springer AG, about financing a joint bid for Taylor Nelson Sofres, the Daily Telegraph said, citing an unidentified person familiar with the matter. The stock declined 6.5 pence, or 2.4 percent, to 269.25.
Trikona Capital (TRC LN): The U.K.-based fund that invests in Indian property is releasing results. The shares remained unchanged at 74.5.
Xstrata Plc (XTA LN): Teck Cominco Ltd. and Xstrata will close the joint-venture Lennard Shelf Pillara zinc mine in Western Australia earlier than planned because of a decline in zinc prices and the rising Australian dollar. The shares rose 101 pence, or 2.7 percent, to 3,880.
To contact the reporter on this story: Lenka Ponikelska in London lponikelska1@bloomberg.net
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Ahlers, Continental, Gerresheimer: German Equity Market Preview
By Nadja Brandt
July 15 (Bloomberg) -- The following is a list of companies whose shares may have unusual price changes in Germany. Stock symbols are in parentheses, and share prices are from the previous close.
The X-DAX Index lost 0.6 percent to 6,159.01. The measure, derived from trading in DAX Index futures, provides an estimate of Germany's benchmark index. The DAX climbed 0.8 percent to 6,200.25.
Ahlers AG (AAH GR): Germany's second-largest menswear maker is scheduled to release second-quarter results. The company in April said first-quarter profit increased 35 percent on higher sales in its home market. The shares climbed 5 cents, or 0.6 percent, to 8.05 euros in Frankfurt floor trading.
Continental AG (CON GY): Europe's second-largest tiremaker hired Goldman Sachs Group Inc. to help defend against a potential hostile takeover attempt from Schaeffler Group, Die Welt reported, citing unidentified people in the financial industry. The shares climbed 11.84 euros, or 22 percent, to 65.80 euros.
Gerresheimer AG (GXI GY): The medical packaging company that sold shares for the first time last year plans to post second- quarter results. The company in April reported a first-quarter profit after sales at its life science and pharmaceuticals units rose. The shares added 56 cents, or 1.8 percent, to 32.20 euros.
To contact the reporter on this story: Nadja Brandt in Los Angeles at nbrandt@bloomberg.net.
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July 15 (Bloomberg) -- The following is a list of companies whose shares may have unusual price changes in Germany. Stock symbols are in parentheses, and share prices are from the previous close.
The X-DAX Index lost 0.6 percent to 6,159.01. The measure, derived from trading in DAX Index futures, provides an estimate of Germany's benchmark index. The DAX climbed 0.8 percent to 6,200.25.
Ahlers AG (AAH GR): Germany's second-largest menswear maker is scheduled to release second-quarter results. The company in April said first-quarter profit increased 35 percent on higher sales in its home market. The shares climbed 5 cents, or 0.6 percent, to 8.05 euros in Frankfurt floor trading.
Continental AG (CON GY): Europe's second-largest tiremaker hired Goldman Sachs Group Inc. to help defend against a potential hostile takeover attempt from Schaeffler Group, Die Welt reported, citing unidentified people in the financial industry. The shares climbed 11.84 euros, or 22 percent, to 65.80 euros.
Gerresheimer AG (GXI GY): The medical packaging company that sold shares for the first time last year plans to post second- quarter results. The company in April reported a first-quarter profit after sales at its life science and pharmaceuticals units rose. The shares added 56 cents, or 1.8 percent, to 32.20 euros.
To contact the reporter on this story: Nadja Brandt in Los Angeles at nbrandt@bloomberg.net.
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Credit Agricole and EADS May Move: French Equity Preview
By Heather Smith
July 15 (Bloomberg) -- The following is a list of companies whose shares may have unusual price changes in Paris. Stock symbols are in parentheses after company names. Share prices are from the last close.
France's CAC 40 Index added 41.89, or 1 percent, to close at 4142.53 in Paris, after dropping 3.9 percent last week. The SBF 120 Index climbed 1 percent to 2992.31.
Credit Agricole SA (ACA FP): The board of France's second largest bank will meet tomorrow to discuss whether to remove Georges Pauget from the chief executive officer post, which he has held since September 2005, four people with knowledge of the meeting said. The shares rose 29 cents, or 2.5 percent, to 11.86 euros.
European Aeronautic, Defence & Space Co. (EAD FP): EADS's Airbus SAS, the world's biggest planemaker, won an order for 55 airlines from Gulf carrier Etihad Airways worth about $11 billion at list prices, the Toulouse, France-based unit said today at the Farnborough International Air Show outside London. Shares rose 66 cents, or 6.2 percent, to 11.40 euros.
To contact the reporter on this story: Heather Smith in Paris at hsmith26@bloomberg.net
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July 15 (Bloomberg) -- The following is a list of companies whose shares may have unusual price changes in Paris. Stock symbols are in parentheses after company names. Share prices are from the last close.
France's CAC 40 Index added 41.89, or 1 percent, to close at 4142.53 in Paris, after dropping 3.9 percent last week. The SBF 120 Index climbed 1 percent to 2992.31.
Credit Agricole SA (ACA FP): The board of France's second largest bank will meet tomorrow to discuss whether to remove Georges Pauget from the chief executive officer post, which he has held since September 2005, four people with knowledge of the meeting said. The shares rose 29 cents, or 2.5 percent, to 11.86 euros.
European Aeronautic, Defence & Space Co. (EAD FP): EADS's Airbus SAS, the world's biggest planemaker, won an order for 55 airlines from Gulf carrier Etihad Airways worth about $11 billion at list prices, the Toulouse, France-based unit said today at the Farnborough International Air Show outside London. Shares rose 66 cents, or 6.2 percent, to 11.40 euros.
To contact the reporter on this story: Heather Smith in Paris at hsmith26@bloomberg.net
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Asian Stocks Drop, Led by Banks, as Credit Concerns Increase
By Chen Shiyin and Chua Kong Ho
July 15 (Bloomberg) -- Asian stocks fell, dragging the region's benchmark index to the lowest since November 2006, on concern widening credit market losses will slow economic growth.
Mitsubishi UFJ Financial Group Inc. dropped after Japan's top three banks said they held $44 billion of debt issued by U.S. mortgage lenders including Fannie Mae and Freddie Mac, which the Treasury Department has pledged to support. Cathay Financial Holding Co. tumbled after disclosing $6.6 billion of debt in the two embattled U.S. companies. Matsushita Electric Industrial Co. fell after Nikko Citigroup Ltd. said earnings may decline.
The MSCI Asia-Pacific Index lost 2.2 percent to 129.53 at 1:40 p.m. Tokyo time. All of its 10 industry groups fell, with financial stocks accounting for 42 percent of the drop. Twelve stocks declined for each one that rose.
``Freddie and Fannie are basically quasi-sovereigns and many Asian governments and banks hold their debt,'' said Leslie Phang, the Singapore-based head of investments at the private-client unit of Schroders Plc, which oversees about $260 billion globally. ``Nobody expected them to blow up and it's shaken the foundations.''
Taiwan's Taiex Index slumped 3.3 percent, the biggest drop in the region. Japan's Nikkei 225 Stock Average declined 1.8 percent to 12,776.52, on course for its lowest close since April 1. Benchmark indexes fell in most of the region's markets.
U.S. stocks dropped yesterday, sending the Standard & Poor's 500 Index 0.9 percent lower. Financial shares slumped after last week's collapse of IndyMac Bancorp Inc. spurred speculation regional banks are short of capital.
Financial Stocks Slump
MSCI's Asian index has dropped 17 percent this year, led by financials, as the world's largest banks and securities firms reported more than $414 billion of writedowns and credit losses.
Mitsubishi UFJ, Japan's largest bank by market value, dropped 4.8 percent to 931 yen. Sumitomo Mitsui Financial Group Inc., the second-biggest, lost 4.8 percent to 795,000 yen, while smaller rival Mizuho Financial dropped 4.5 percent to 514,000 yen.
The three Japanese banks held a total of 4.7 trillion yen ($44 billion) in debt securities issued by U.S. government-backed mortgage finance companies including Fannie Mae and Freddie Mac, and by U.S. federal agency Ginnie Mae, as of March 31, according to the banks.
Yoshimi Watanabe, the head of Japan's financial regulator, today urged caution about holding Fannie Mae and Freddie Mac debt. Investor Jim Rogers said in an interview yesterday that a U.S. Treasury Department's plan to shore up the two companies is an ``unmitigated disaster.''
Cathay Financial, Taiwan's biggest listed financial services company, dropped 7 percent to NT$58.70, set for its lowest close since April 2006. The company said it hasn't incurred any losses from its investments in Fannie Mae and Freddie Mac.
Credit Crisis
Commonwealth Bank of Australia, the country's biggest mortgage provider, dropped 3.3 percent to A$38.82, poised for its largest retreat since June 10. JPMorgan Chase & Co. lowered its rating to ``neutral'' from ``overweight,'' because of a ``cautionary'' outlook for the company's 2008 earnings.
``Investor confidence is taking a hit from the state of the U.S. financial system,'' said John Padilla, who helps manage the equivalent of about $3.4 billion Metropolitan Bank & Trust Co. in Manila. ``Banks will stay out of favor as long as investors don't see an end to credit-market losses in the U.S.''
Australia & New Zealand Banking Group Ltd. lost 2.8 percent to A$17.31 after the Sydney Morning Herald said the bank recorded a A$275 million ($267 million) loss from selling shares it seized from collapsed margin lender Opes Prime Group Ltd.
Matsushita, the world's biggest consumer-electronics maker, lost 1.8 percent to 2,235 yen. The stock's rating was cut to ``hold'' from ``buy'' at Nikko Citigroup.
LG Electronics Inc., the world's fourth-largest maker of mobile phones, dropped 4.4 percent to 107,500 won in Seoul. CJ Investment & Securities Co. lowered its share-price estimate by 13 percent, citing lower earnings prospects in the third quarter.
To contact the reporter for this story: Chen Shiyin in Singapore at schen37@bloomberg.net; Chua Kong Ho in Shanghai at Kchua6@bloomberg.net.
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China's Stocks Fall Most in Two Weeks; Ping An Leads Decline
By Chua Kong Ho
July 15 (Bloomberg) -- China's stocks fell the most in two weeks, led by banks and insurers, on concern they are holding debt issued by Fannie Mae and Freddie Mac, the two U.S. mortgage- finance companies that lost half their market value last week on concern about their ability to refinance.
Ping An Insurance (Group) Co. and Shanghai Pudong Development Bank Co. led declines, tracking losses by financial shares globally. U.S. financial stocks slumped yesterday after initially rallying on the Treasury Department's bailout plan for Fannie Mae and Freddie Mac. Asian banks declined after Taiwan's Cathay Financial Holding Co. said it held more than $6 billion in debt issued by the two U.S. companies and the Nikkei reported the three-largest Japanese banks held $44 billion.
``Freddie and Fannie are basically quasi-sovereigns and many Asian governments and banks hold their debt,'' said Leslie Phang, the Singapore-based head of investments at the private-clients unit of Schroders Plc, which oversees about $260 billion globally. ``Nobody expected them to blow up and it's shaken the foundations. The question is not whether you're holding them, it's a matter of how much.''
The CSI 300 Index, which tracks stocks on both the Shanghai and Shenzhen exchanges, lost 89.22, of 3 percent, to 2,886.66 at the 11:30 a.m. local-time break, the most since July 1. All 10 industry groups declined, with financial shares contributing the most to the retreat.
Fannie Mae and Freddie Mac, the two U.S. government-backed mortgage-finance companies, lost about half of their market value last week on concerns about their ability to refinance debt. U.S. Treasury Secretary Henry Paulson has asked Congress for authority to buy unlimited stakes in the two companies that buy or finance almost half the $12 trillion of U.S. mortgages, and provide loans to them.
Banks Slide
Ping An, the nation's second-largest insurer, lost 4.9 percent to 41.09 yuan, while rival China Life Insurance Co. dropped 5.6 percent to 23.93 yuan. Shanghai Pudong, part-owned by Citigroup Inc., declined 6.2 percent to 22.05 yuan.
Industrial & Commercial Bank of China Ltd., the country's largest, retreated 2.2 percent to 4.94 yuan. The bank's spokesman said he couldn't immediately comment when reached by Bloomberg News.
China Construction Bank Corp. declined 2.6 percent, while Bank of China Ltd. slid 2.4 percent.
Citic Securities Co., the nation's biggest brokerage, dropped 4.3 percent to 23.42 yuan, after its competitor Guoyuan Securities Co. joined Hong Yuan Securities Co. in posting a plunge in first-half profit. Beijing-based Guoyuan slumped 5.1 percent to 16.78 yuan.
The benchmark CSI 300 Index has slumped 51 percent from its Oct. 16 record. The value of securities transactions in June was 62 percent lower compared to a year earlier. A measure of financial stocks contributed to more than half of the index's decline today.
The Shanghai Composite Index, a measure of shares traded in the city, lost 2.5 percent to 2,805.92. The Shenzhen Composite Index dropped 2.1 percent.
The following shares also rose or fell in China. Stock symbols are in parentheses after company names.
Chongqing Iron & Steel Co. (601005 CH), a steelmaker, gained 4.1 percent to 5.63 yuan, after saying first-half profit will rise more than 60 percent.
Shandong Gold Mining Co. (600547 CH), the third-largest Chinese bullion producer, added 3.4 percent to 66.48 yuan. First- half profit probably jumped more than fivefold because of higher output and lower costs, it said.
To contact the reporter responsible for this story: Chua Kong Ho in Shanghai at Kchua6@bloomberg.net
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July 15 (Bloomberg) -- China's stocks fell the most in two weeks, led by banks and insurers, on concern they are holding debt issued by Fannie Mae and Freddie Mac, the two U.S. mortgage- finance companies that lost half their market value last week on concern about their ability to refinance.
Ping An Insurance (Group) Co. and Shanghai Pudong Development Bank Co. led declines, tracking losses by financial shares globally. U.S. financial stocks slumped yesterday after initially rallying on the Treasury Department's bailout plan for Fannie Mae and Freddie Mac. Asian banks declined after Taiwan's Cathay Financial Holding Co. said it held more than $6 billion in debt issued by the two U.S. companies and the Nikkei reported the three-largest Japanese banks held $44 billion.
``Freddie and Fannie are basically quasi-sovereigns and many Asian governments and banks hold their debt,'' said Leslie Phang, the Singapore-based head of investments at the private-clients unit of Schroders Plc, which oversees about $260 billion globally. ``Nobody expected them to blow up and it's shaken the foundations. The question is not whether you're holding them, it's a matter of how much.''
The CSI 300 Index, which tracks stocks on both the Shanghai and Shenzhen exchanges, lost 89.22, of 3 percent, to 2,886.66 at the 11:30 a.m. local-time break, the most since July 1. All 10 industry groups declined, with financial shares contributing the most to the retreat.
Fannie Mae and Freddie Mac, the two U.S. government-backed mortgage-finance companies, lost about half of their market value last week on concerns about their ability to refinance debt. U.S. Treasury Secretary Henry Paulson has asked Congress for authority to buy unlimited stakes in the two companies that buy or finance almost half the $12 trillion of U.S. mortgages, and provide loans to them.
Banks Slide
Ping An, the nation's second-largest insurer, lost 4.9 percent to 41.09 yuan, while rival China Life Insurance Co. dropped 5.6 percent to 23.93 yuan. Shanghai Pudong, part-owned by Citigroup Inc., declined 6.2 percent to 22.05 yuan.
Industrial & Commercial Bank of China Ltd., the country's largest, retreated 2.2 percent to 4.94 yuan. The bank's spokesman said he couldn't immediately comment when reached by Bloomberg News.
China Construction Bank Corp. declined 2.6 percent, while Bank of China Ltd. slid 2.4 percent.
Citic Securities Co., the nation's biggest brokerage, dropped 4.3 percent to 23.42 yuan, after its competitor Guoyuan Securities Co. joined Hong Yuan Securities Co. in posting a plunge in first-half profit. Beijing-based Guoyuan slumped 5.1 percent to 16.78 yuan.
The benchmark CSI 300 Index has slumped 51 percent from its Oct. 16 record. The value of securities transactions in June was 62 percent lower compared to a year earlier. A measure of financial stocks contributed to more than half of the index's decline today.
The Shanghai Composite Index, a measure of shares traded in the city, lost 2.5 percent to 2,805.92. The Shenzhen Composite Index dropped 2.1 percent.
The following shares also rose or fell in China. Stock symbols are in parentheses after company names.
Chongqing Iron & Steel Co. (601005 CH), a steelmaker, gained 4.1 percent to 5.63 yuan, after saying first-half profit will rise more than 60 percent.
Shandong Gold Mining Co. (600547 CH), the third-largest Chinese bullion producer, added 3.4 percent to 66.48 yuan. First- half profit probably jumped more than fivefold because of higher output and lower costs, it said.
To contact the reporter responsible for this story: Chua Kong Ho in Shanghai at Kchua6@bloomberg.net
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Australia's S&P/ASX Slumps to 2 1/2 Year Low on Bank Concerns
By Shani Raja
July 15 (Bloomberg) -- Australia's S&P/ASX 200 Index fell to its lowest in almost 2 1/2 years on concern bank losses will widen after the collapse of U.S. lender IndyMac Bancorp Inc.
National Australia Bank Ltd., which last week said it may have to increase provisions for $1.1 billion of debt investments, tumbled to its lowest since September 2001, while Australia & New Zealand Banking Group Ltd. fell to its lowest since Dec. 2003. U.S. financial shares yesterday slumped to their lowest level in almost a decade.
Australia's benchmark index lost 107.60, or 2.2 percent, to 4,813.40, its lowest since Feb. 17, 2006, at 2:25 p.m. in Sydney, extending its loss this month to 7.7 percent. The S&P/ASX 200 has tumbled 29 percent since its record on Nov. 1, 2007, as banks pay more for credit in the wake of the U.S. subprime rout.
In the U.S., the Standard & Poor's 500 Financials Index tumbled 5 percent after the collapse of IndyMac spurred speculation regional banks are short of capital. The S&P 500 slid 0.9 percent to 1,228.3.
The following companies were among the biggest losers and gainers on the Australian stock exchange.
Gold producers: Sino Gold Mining Ltd. (SGX AU), owner of China's second-largest gold mine, advanced 38 cents, or 7.6 percent, to A$5.41, the index's third-biggest gainer. Newcrest Mining Ltd. (NCM AU), owner of Australia's largest, rose 43 cents, or 1.3 percent, to A$32.90, the highest since June 3.
Gold rose to the highest in more than three months on heightened speculation the U.S. or Israel is preparing to attack Iran, boosting demand for the metal as a haven.
Alchemy Resources Ltd. (ALY AU), an Australian gold explorer, soared 3 cents, or 20 percent, to 18 cents, the highest since Dec. 17, 2007. The company said it discovered high-grade hematite iron ore at the recently acquired Three Rivers Gold Project in Western Australia.
Allco Finance Group Ltd. (AFG AU), the Australian asset manager that's lost more than 90 percent of its value this year, rallied 6 cents, or 16 percent, to 44 cents, the biggest gainer on the index. The company said it will cut senior debt to A$400 million ($389 million) by June 2009 after refinancing loans with bankers.
Centro Properties Group (CNP AU), the shopping mall owner facing a deadline to repay as much as A$6.6 billion ($6.3 billion) of debt, was the benchmark's second-biggest gainer. Its shares rose 4 cents, or 15 percent, to 27 cents, the most since April 3, after raising $714 million selling a stake in its unlisted Centro America Fund.
CP1 Ltd. (CPK AU), an Australian property developer, fell 2 cents, or 17 percent, to a record low 10 cents. The company placed four of its Victoria waterfront developments on the market, the Australian Financial Review reported today, citing sales agent Colliers International.
To contact the reporter on this story: Shani Raja in Sydney at sraja4@bloomberg.net.
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July 15 (Bloomberg) -- Australia's S&P/ASX 200 Index fell to its lowest in almost 2 1/2 years on concern bank losses will widen after the collapse of U.S. lender IndyMac Bancorp Inc.
National Australia Bank Ltd., which last week said it may have to increase provisions for $1.1 billion of debt investments, tumbled to its lowest since September 2001, while Australia & New Zealand Banking Group Ltd. fell to its lowest since Dec. 2003. U.S. financial shares yesterday slumped to their lowest level in almost a decade.
Australia's benchmark index lost 107.60, or 2.2 percent, to 4,813.40, its lowest since Feb. 17, 2006, at 2:25 p.m. in Sydney, extending its loss this month to 7.7 percent. The S&P/ASX 200 has tumbled 29 percent since its record on Nov. 1, 2007, as banks pay more for credit in the wake of the U.S. subprime rout.
In the U.S., the Standard & Poor's 500 Financials Index tumbled 5 percent after the collapse of IndyMac spurred speculation regional banks are short of capital. The S&P 500 slid 0.9 percent to 1,228.3.
The following companies were among the biggest losers and gainers on the Australian stock exchange.
Gold producers: Sino Gold Mining Ltd. (SGX AU), owner of China's second-largest gold mine, advanced 38 cents, or 7.6 percent, to A$5.41, the index's third-biggest gainer. Newcrest Mining Ltd. (NCM AU), owner of Australia's largest, rose 43 cents, or 1.3 percent, to A$32.90, the highest since June 3.
Gold rose to the highest in more than three months on heightened speculation the U.S. or Israel is preparing to attack Iran, boosting demand for the metal as a haven.
Alchemy Resources Ltd. (ALY AU), an Australian gold explorer, soared 3 cents, or 20 percent, to 18 cents, the highest since Dec. 17, 2007. The company said it discovered high-grade hematite iron ore at the recently acquired Three Rivers Gold Project in Western Australia.
Allco Finance Group Ltd. (AFG AU), the Australian asset manager that's lost more than 90 percent of its value this year, rallied 6 cents, or 16 percent, to 44 cents, the biggest gainer on the index. The company said it will cut senior debt to A$400 million ($389 million) by June 2009 after refinancing loans with bankers.
Centro Properties Group (CNP AU), the shopping mall owner facing a deadline to repay as much as A$6.6 billion ($6.3 billion) of debt, was the benchmark's second-biggest gainer. Its shares rose 4 cents, or 15 percent, to 27 cents, the most since April 3, after raising $714 million selling a stake in its unlisted Centro America Fund.
CP1 Ltd. (CPK AU), an Australian property developer, fell 2 cents, or 17 percent, to a record low 10 cents. The company placed four of its Victoria waterfront developments on the market, the Australian Financial Review reported today, citing sales agent Colliers International.
To contact the reporter on this story: Shani Raja in Sydney at sraja4@bloomberg.net.
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Gold Shines As The Financial Storm Continues
Daily Forex Fundamentals | Written by Easy Forex | Jul 15 08 01:26 GMT |
U.S. Dollar Trading (USD) staged a minor recovery during the Asian and European sessions as the markets digested the latest plan from the Treasury to stabilize the Government Sponsored Entities (GSE) Freddie Mac and Fannie May. Gains were reversed in the US session as equities turned south on doubts about the viability of the government GSE backstop. In the U.S. share markets, the NASDAQ was down 26 points (0.90%) and the Dow Jones was down 45 points (0.41%). Crude Oil closed up $0.20 ending the New York session at $145.18 per barrel. Looking ahead, June PPI is expected to rise 1.3% slightly slower than 1.4% in May while the Core PPI is seen at 0.3%. Markets will be paying attention to Fed Chief Bernanke as he gives his semiannual monetary policy testimony.
The Euro (EUR) was able to pare losses sustained from the GSE’s rescue plan as the market focused on regional banks when the FIDC commented that more banks are expected to fail in the US. May Industrial Production came in weak at -1.9% confirming the slowdown in the Eurozone. Overall the EUR/USD traded with a low of 1.5842 and a high of 1.5971 before closing the day at 1.5908 in the New York session. Looking ahead, the July German Zew survey is seen at -55 from -52.4 in June.
The Japanese Yen (JPY) was sold as stocks recovered and risk taking came back into the market but as equities turned south in the US session the USD/JPY gave up all of its gains. EUR/JPY came off new year highs of 169.67 early in the Asian session as the EUR/USD came off highs. Overall the USDJPY traded with a low of 106.06 and a high of 106.81 before closing the day around 106.16 in the New York session. Looking ahead, Bank of Japan interest rate announcement and the BOJ monthly report released during the Asian session.
The Sterling (GBP) took advantage of USD weakness during the US session regaining the 1.9900 level. June PPI input was slightly lower than expected at 2.1% contributing to a more dovish stance the BoE is expected to take on interest rates into the future. The BoE”s Kate Barker was reported as saying that the central bank is concerned about keeping rates too tight allowing the economy to weaken more than is necessary. Overall the GBP/USD traded with a low of 1.9816 and a high of 1.9962 before closing the day at 1.9941 in the New York session. Looking ahead, June CPI seen at 0.4% down slightly form 0.6% in May but year on year is expected to jump to 3.6% from 3.3%.
The Australian Dollar (AUD) was able to sustain the new levels above .9700 as gold continued to make solid gains. AUD/NZD reached new record highs trading above 1.2750. In NZD data we had the 2nd Quarter CPI coming in at 4.0% year on year and May Core Retail Sales rising 0.7%. Overall the AUD/USD traded with a low of 0.9665 and a high of 0.9735 before closing the day at 0.9721. Looking ahead, the RBA meeting minutes will be scrutinized for future rate movement.
Gold (XAU) had another good day as investors flocked to the precious metal seen as a safe haven and inflation hedge. Overall trading with a low of USD$954.40 and high of USD$974.65 ending the New York session at USD$972 an ounce.
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U.S. Dollar Trading (USD) staged a minor recovery during the Asian and European sessions as the markets digested the latest plan from the Treasury to stabilize the Government Sponsored Entities (GSE) Freddie Mac and Fannie May. Gains were reversed in the US session as equities turned south on doubts about the viability of the government GSE backstop. In the U.S. share markets, the NASDAQ was down 26 points (0.90%) and the Dow Jones was down 45 points (0.41%). Crude Oil closed up $0.20 ending the New York session at $145.18 per barrel. Looking ahead, June PPI is expected to rise 1.3% slightly slower than 1.4% in May while the Core PPI is seen at 0.3%. Markets will be paying attention to Fed Chief Bernanke as he gives his semiannual monetary policy testimony.
The Euro (EUR) was able to pare losses sustained from the GSE’s rescue plan as the market focused on regional banks when the FIDC commented that more banks are expected to fail in the US. May Industrial Production came in weak at -1.9% confirming the slowdown in the Eurozone. Overall the EUR/USD traded with a low of 1.5842 and a high of 1.5971 before closing the day at 1.5908 in the New York session. Looking ahead, the July German Zew survey is seen at -55 from -52.4 in June.
The Japanese Yen (JPY) was sold as stocks recovered and risk taking came back into the market but as equities turned south in the US session the USD/JPY gave up all of its gains. EUR/JPY came off new year highs of 169.67 early in the Asian session as the EUR/USD came off highs. Overall the USDJPY traded with a low of 106.06 and a high of 106.81 before closing the day around 106.16 in the New York session. Looking ahead, Bank of Japan interest rate announcement and the BOJ monthly report released during the Asian session.
The Sterling (GBP) took advantage of USD weakness during the US session regaining the 1.9900 level. June PPI input was slightly lower than expected at 2.1% contributing to a more dovish stance the BoE is expected to take on interest rates into the future. The BoE”s Kate Barker was reported as saying that the central bank is concerned about keeping rates too tight allowing the economy to weaken more than is necessary. Overall the GBP/USD traded with a low of 1.9816 and a high of 1.9962 before closing the day at 1.9941 in the New York session. Looking ahead, June CPI seen at 0.4% down slightly form 0.6% in May but year on year is expected to jump to 3.6% from 3.3%.
The Australian Dollar (AUD) was able to sustain the new levels above .9700 as gold continued to make solid gains. AUD/NZD reached new record highs trading above 1.2750. In NZD data we had the 2nd Quarter CPI coming in at 4.0% year on year and May Core Retail Sales rising 0.7%. Overall the AUD/USD traded with a low of 0.9665 and a high of 0.9735 before closing the day at 0.9721. Looking ahead, the RBA meeting minutes will be scrutinized for future rate movement.
Gold (XAU) had another good day as investors flocked to the precious metal seen as a safe haven and inflation hedge. Overall trading with a low of USD$954.40 and high of USD$974.65 ending the New York session at USD$972 an ounce.
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FX Technical Commentary
Daily Forex Technicals | Written by Easy Forex | Jul 15 08 01:32 GMT |
Euro 1.5890
Initial support at 1.5765 (July 11 low) followed by 1.5692 (July 10 low). Initial resistance is now located 1.5972 (July 11 high) at followed by 1.6019 (Apr 22 high).
Yen 106.20
Initial support is located at 105.66 (July 11 low) followed by 104.99 (Jun 30 low). Initial resistance is now at 107.30 (July 11 high) followed by 107.76 (July 7 high).
Pound 1.9955
Initial support at 1.9754 (July 11 low) followed by 1.9673 (July 9 low). Initial resistance is now at 1.9959 (July 14 high) followed by 2.0008 (July 1 high)
Australian Dollar 0.9720
Initial support at 0.9597 (July 11 low) followed by 0.9546 (July 10 low). Initial resistance is now at 0.9737 (July 14 high) followed by 0.9792 (July open + June range* 0.618).
Gold 972
Initial support at 942 (Jul 11 low) followed by 926 (Jul 10 low). Initial resistance is now at 975.3 (July 14 high) followed by 988.49 (76.4% retracement of the 1032.50-846.00 decline).
Currency Sup 2 Sup 1 Spot Res 1 Res 2
EUR/USD 1.5692 1.5765 1.5890 1.5972 1.6019
USD/JPY 104.99 105.66 106.20 107.30 107.76
GBP/USD 1.9673 1.9754 1.9955 1.9959 2.0008
AUD/USD 0.9546 0.9597 0.9720 0.9737 0.9792
XAU/USD 926.00 942.00 972.00 975.30 988.49
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Euro 1.5890
Initial support at 1.5765 (July 11 low) followed by 1.5692 (July 10 low). Initial resistance is now located 1.5972 (July 11 high) at followed by 1.6019 (Apr 22 high).
Yen 106.20
Initial support is located at 105.66 (July 11 low) followed by 104.99 (Jun 30 low). Initial resistance is now at 107.30 (July 11 high) followed by 107.76 (July 7 high).
Pound 1.9955
Initial support at 1.9754 (July 11 low) followed by 1.9673 (July 9 low). Initial resistance is now at 1.9959 (July 14 high) followed by 2.0008 (July 1 high)
Australian Dollar 0.9720
Initial support at 0.9597 (July 11 low) followed by 0.9546 (July 10 low). Initial resistance is now at 0.9737 (July 14 high) followed by 0.9792 (July open + June range* 0.618).
Gold 972
Initial support at 942 (Jul 11 low) followed by 926 (Jul 10 low). Initial resistance is now at 975.3 (July 14 high) followed by 988.49 (76.4% retracement of the 1032.50-846.00 decline).
Currency Sup 2 Sup 1 Spot Res 1 Res 2
EUR/USD 1.5692 1.5765 1.5890 1.5972 1.6019
USD/JPY 104.99 105.66 106.20 107.30 107.76
GBP/USD 1.9673 1.9754 1.9955 1.9959 2.0008
AUD/USD 0.9546 0.9597 0.9720 0.9737 0.9792
XAU/USD 926.00 942.00 972.00 975.30 988.49
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Thailand, Philippines May Raise Key Rates to Contain Inflation
By Shamim Adam and Michael J. Munoz
July 15 (Bloomberg) -- Policy makers in Thailand and the Philippines may increase interest rates this week, joining central banks across the region in raising borrowing costs to contain inflation that's at the fastest in at least a decade.
The Bank of Thailand will raise the one-day bond repurchase rate for the first time in two years tomorrow, according to all 19 economists surveyed by Bloomberg News. Bangko Sentral ng Pilipinas, meeting a day later, will increase the rate it pays banks for overnight deposits a second straight month, according to all 20 economists in a separate survey.
Surging oil and food costs are forcing central banks from Vietnam to Pakistan to raise borrowing costs to tame inflation, even as a U.S. slowdown hurts demand for Asian exports and erodes growth in the region. That's leaving governments and policy makers torn between the need to control inflation and maintaining economic expansion.
``Asian central banks are shifting towards a more hawkish bias, and those deemed not to be hawkish enough risk inflation expectations becoming unanchored,'' said Vishnu Varathan, a regional economist at Forecast Singapore Pte. ``We can expect higher interest rates in the weeks and months ahead.''
Indonesia raised its benchmark rate for a third straight month in July, while India boosted borrowing costs twice in June. In Vietnam, the central bank raised its base rate to 14 percent last month, the highest in Asia.
The Bank of Thailand, which has held the policy rate at 3.25 percent since August, last raised it in June 2006. The central bank may raise the rate by 25 basis points to 3.5 percent tomorrow, according to 16 of 19 economists surveyed by Bloomberg News. The remaining three expect a half-a-percentage- point increase.
Transport, Labor
Thai consumer prices gained 8.9 percent last month, the fastest in a decade.
Inflationary pressures are increasing in Thailand amid expectations of higher transportation and labor costs. The government will gradually remove subsidies on gas used to fuel vehicles and industry, and for households, Finance Minister Surapong Suebwonglee said last month. The minimum wage was increased in provinces across Thailand in June.
Higher rates in Thailand would come at a time when consumer confidence is at the lowest level this year amid intensifying anti-government protests. Thai Prime Minister Samak Sundaravej's ruling People Power Party faces legal challenges that may force it to disband, and the five-month old government has been the target of street protests since May 25.
Inflation Threat
``The hike probably will worsen the economic situation, but high and persistent inflation is worse,'' said Dwyfor Evans, a strategist at State Street Global Markets in Hong Kong. ``Allowing political volatility to overrule policy credibility sends a very poor signal to investors and they should avoid this at all costs.''
A quarter-point increase by the Bank of Thailand would be insufficient and wouldn't stem a decline in the currency, said Tim Condon, chief Asia economist at ING Groep NV in Singapore. The Thai baht is the worst-performing currency in Asia this year.
``The way things are now, I don't think a 25 basis-point rate hike is going to assuage the baht selling pressure,'' Condon said. ``To get inflation back under control, it will really require a tightening of policies. Much higher interest rates is what it will need.''
Bangko Sentral ng Pilipinas raised its key interest rate in June for the first time in more than two years. Deputy Governor Diwa Guinigundo said last week the central bank's ``bias is towards tightening.'' The authority is considering increasing its 2008 inflation forecast for a second time this year.
Philippine Inflation
The central bank will increase the benchmark rate by a quarter percentage point to 5.5 percent, according to 16 of 20 economists surveyed. Four expect a 50 basis-point gain.
Bangko Sentral last month lifted its estimate for inflation in 2008 to a range of 7 percent to 9 percent, from the original forecast of 4 percent to 5 percent. Consumer prices rose 11.4 percent in June from a year earlier, the steepest climb in 14 years.
Prices are set to increase further as transportation and fuel costs rise. The Philippine government approved higher transport fares last week to allow drivers and vehicle owners to cope with rising fuel prices.
``While some key food sectors like rice seem to have stabilized, the risks that broad commodity prices, especially energy prices, would stay stubbornly high have increased,'' said Simon Wong, an economist at Standard Chartered Bank in Hong Kong. ``We now expect more aggressive tightening.''
The following tables show economists' estimates for Thai and Philippine interest rates:
Thailand Benchmark Interest Rate
------------------------------------------------------
July Aug. Oct. End of
Firm 16 27 8 2008
------------------------------------------------------
Median 3.50% 3.75% 4.00% 4.00%
% Estimates at Median 84% 100% 83% 67%
High 3.75% 3.75% 4.00% 4.25%
Low 3.50% 3.75% 3.75% 3.75%
Number of Estimates 19 7 6 6
------------------------------------------------------
Action Economics 3.50% -- -- --
ATR-Kim Eng Capital 3.50% 3.75% 4.00% 4.00%
Brown Brothers Harriman 3.50% 3.75% 4.00% 4.00%
Capital Economics Ltd. 3.50% -- -- --
Capital Nomura Securities 3.50% 3.75% 3.75% 3.75%
Citi 3.75% -- -- --
Credit Suisse 3.50% -- -- --
HSBC 3.50% 3.75% 4.00% 4.00%
Ideaglobal 3.50% 3.75% -- --
ING Groep NV 3.50% -- -- --
JP Morgan Chase 3.50% -- -- --
Lehman Brothers 3.75% -- -- --
Moody's Economy.com 3.50% 3.75% 4.00% 4.25%
Morgan Stanley 3.50% -- -- --
SCB Securities 3.50% -- -- --
Standard Chartered Bank 3.50% -- -- --
Tisco Securities 3.50% 3.75% 4.00% 4.00%
UBS 3.75% -- -- --
UOB Group 3.50% -- -- --
------------------------------------------------------
Philippines Overnight Borrowing Rate
-------------------------------------------
Policy Meeting July Aug. Oct.
Dates 17 28 9
-------------------------------------------
Median 5.50% 5.75% 6.00%
% forecasts at Median 80% 69% 55%
High 5.75% 6.25% 6.25%
Low 5.50% 5.50% 5.50%
Number of Estimates 20 13 11
-------------------------------------------
Action Economics 5.50% 5.75% 6.00%
ANZ Banking Group 5.50% 5.75% 5.75%
ATR-Kim Eng Capital 5.50% 5.75% 5.75%
BDO Unibank 5.50% 5.75% 6.00%
Brown Brothers Harrima 5.50% 5.75% 6.00%
Capital Economics 5.50% -- --
CIMB-GK Research 5.50% 5.75% --
Citi 5.75% -- --
Credit Suisse 5.50% -- --
DBS Group 5.50% 5.75% 6.00%
Forecast Singapore 5.75% -- --
Fortis Bank 5.50% 5.75% 6.00%
HSBC 5.50% 5.75% 6.00%
Ideaglobal 5.50% 5.50% 5.75%
ING Groep NV 5.50% -- --
Lehman Brothers 5.50% -- --
Moody's Economy.com 5.50% 5.50% 5.50%
Standard Chartered 5.75% 6.00% 6.25%
Thomson IFR 5.75% 6.25% --
UBS 5.50% -- --
-------------------------------------------
To contact the reporter on this story: Shamim Adam in Singapore at sadam2@bloomberg.net
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China's Economic Growth Probably Slowed on Exports
By Nipa Piboontanasawat
July 15 (Bloomberg) -- China's economic expansion probably slowed for a fourth straight quarter as exports cooled, raising the possibility that the government will switch focus to sustaining growth from fighting inflation.
Gross domestic product grew 10.3 percent in the second quarter from a year earlier, according to the median estimate of 18 economists surveyed by Bloomberg News, after gaining 10.6 percent in the previous three months. June's inflation may have eased to 7.3 percent from 7.7 percent in May.
Premier Wen Jiabao pledged this month efforts to maintain ``sound and fast'' economic growth and Chinese leaders visited exporters to hear their concerns. Policies to stimulate the economy and to help domestic manufacturers, such as slowing the yuan's appreciation and deferring interest-rate increases, would risk fanning inflation just as price gains begin to slow.
``Policy makers are increasingly worried about the threats to economic growth,'' said Peng Wensheng, head of China research at Barclays Capital in Hong Kong. ``Inflation is not the only priority -- they definitely don't want to see growth sliding to below 10 percent.''
The GDP announcement is due July 17 in Beijing. China's economy may expand 10.1 percent this year, down from the 11.9 percent growth in 2007 that was the fastest in 13 years, the survey showed. Inflation has slowed this quarter from a 12-year high in February on smaller food-price gains.
`Crunch Time'
To cool prices, the government has let the yuan gain 6.7 percent versus the U.S. dollar this year, cutting import costs. It has also imposed lending quotas and ordered banks to set aside a record 17.5 percent of deposits as reserves. It hasn't raised interest rates, to avoid attracting overseas capital to an economy flooded with cash.
``It's crunch time for decisions on monetary policy,'' said Stephen Green, the Shanghai-based head of China research for Standard Chartered Bank Plc. ``But loosening could see inflation sweeping back as a bigger problem next year.''
Export growth slowed to 21.9 percent in the first half from 25.7 percent in all of 2007. Leaders at the Group of Eight summit warned last week that climbing food and oil prices threaten global economic growth, forecast by the World Bank to slow to 2.7 percent in 2008 from 3.7 percent last year.
The Ministry of Commerce has suggested China's cabinet slow the pace of the yuan's gains and increase some export rebates to help exporters as global demand falters, an official who declined to be named said yesterday.
Policy Priorities
Chinese leaders' rhetoric ``suggests inflation is slipping down the list of policy priorities,'' said Glenn Maguire, chief Asia-Pacific economist at Societe Generale in Hong Kong. Weakening exports ``threaten to curtail the pace of yuan appreciation and may even lead to a reversal of some recent credit-rationing initiatives,'' Maguire said.
Black Peony (Group) Co., a jeans and cotton-cloth exporter in Jiangsu province, forecasts a six-month loss because of the yuan's gains, reduced export incentives and higher costs.
Manufacturers face rising commodity prices and power shortages. Producer prices may have jumped 8.5 percent last month, the fastest pace since Bloomberg data began in 1999 and quicker than the pace of inflation, according to the survey.
The government ``has little room to ease monetary policy'' because it needs to raise energy prices again to encourage fuel and power production, said Liang Hong, a Hong Kong-based economist with Goldman Sachs Group Inc. China increased fuel and electricity prices last month.
Company Profit
Profit growth at Chinese industrial companies slowed in the first five months to half the pace of a year earlier on record oil and coal prices.
Still, investment, the main driver of the world's fastest- growing major economy, is staying close to last year's pace. Urban fixed-assed spending may have climbed 25.4 percent in the first half, after increasing 25.8 percent for all of 2007, the survey showed.
Retail sales may have climbed 21.3 percent in June from a year earlier, after rising 21.6 percent in May.
The following table shows economists' estimates of economic growth in the second quarter and in 2008 from a year earlier.
----------------------------------------------
2Q 2008
----------------------------------------------
Median 10.3% 10.1%
Average 10.2% 10.1%
High 10.9% 10.5%
Low 9.0% 9.7%
Number of Estimates 18 9
----------------------------------------------
BNP Paribas 10.2% 10.1%
Bank of China (Hong Kong) 10.0% 10.0%
CFC Seymour 10.2% 10.0%
Citic Ka Wah Bank 10.4% 10.2%
Daiwa Institute of Research 10.6% --
Deutsche Bank 10.5% --
High Frequency Economics 9.0% --
HSBC 9.9% 9.7%
Industrial Bank 10.9% 10.4%
ING Groep NV 10.5% 10.5%
JPMorgan Chase 10.1% --
Lehman Brothers 10.1% --
Macroecon Global Advisors 9.5% --
Mitsubishi UFJ Securities 10.6% --
Moody's Economy.com 10.3% 10.0%
Natixis 10.3% 10.3%
Okasan Securities 10.5% --
Royal Bank of Scotland 10.2% --
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To contact the reporter on this story: Nipa Piboontanasawat in Hong Kong at npiboontanas@bloomberg.net
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