Canadian Dollar Falls to Four-Year Low on Economic Outlook, Oil

By Chris Fournier

Oct. 24 (Bloomberg) -- Canada's currency fell to the lowest since September 2004 on speculation the global economic slump will deepen and crude oil prices will decline further.

The loonie, as the currency is known because of the aquatic bird on the one-dollar coin, is poised for a fourth straight weekly decline, the longest losing streak in almost a year. Canada's dollar has weakened 16 percent so far this month, the worst performance since at least 1971 when Bloomberg records begin. Crude accounts for one-tenth of Canada's export revenue.

``There are so many things happening, between commodity prices and absolute market panic on the equity side,'' said Eric Lascelles, chief economics strategist at TD Securities Inc. in Toronto. ``There are some pretty big drivers out there right now, including rampant pessimism and flight-to-safety flows.''

Canada's dollar declined as much as 2.9 percent to C$1.2842 per U.S. dollar, from C$1.2472 yesterday, the lowest since Sept. 23, 2004. It traded at C$1.2722 at 8:02 a.m. in Toronto. One Canadian dollar buys 78.61 U.S. cents. The currency is down 7.1 percent this week.

Crude oil dropped as much as $4.99, or 7.4 percent, to $62.85 a barrel. Crude reached a record $147.27 on July 11. Since then, the loonie has lost 21 percent.

The MSCI World Index lost 3.5 percent to 878.96, extending this week's retreat to 7.6 percent.

Consumer prices rose 3.4 percent from September 2007 after a 3.5 percent annual increase through August, Statistics Canada reported today in Ottawa. The median forecast of 20 analysts surveyed by Bloomberg News was for annual inflation of 3.3 percent.

The yield on the two-year government bond fell 11 basis points, or 0.11 percentage point, to 2.01 percent. The price of the 2.75 percent security due in December 2010 rose 22 cents to C$101.52.

The yield on the 10-year Government of Canada bond fell 6 basis points to 3.56 percent. The price of the 4.25 percent security maturing in June 2018 added 51 cents to C$105.60.

To contact the reporter on this story: Chris Fournier in Montreal at cfournier3@bloomberg.net

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Yen Rises to 13-Year High Versus Dollar as Carry Trade Unwinds

By Agnes Lovasz and Ye Xie

Oct. 24 (Bloomberg) -- The yen climbed to a 13-year high against the dollar as the plunge in U.S. stock-index futures reached allowed limits, encouraging investors to dump higher- yielding assets funded by low-cost loans in Japan.

Japan's currency surged to the strongest in six years against the euro, posting its biggest gain ever, as the prospect of a deepening global recession prompted the unwinding of carry trades. The pound fell below $1.53 in its biggest drop in at least 37 years after the U.K. economy shrank more than forecast in the third quarter, bringing it to the brink of recession.

``I've never seen this before in terms of global financial market carnage,'' said Alan Ruskin, head of international currency strategy in North America at RBS Greenwich Capital Markets Inc. in Greenwich, Connecticut. ``Those who haven't got out of the yen carry trade will have to watch it collapse.''

The yen rose 4.8 percent to 92.66 per dollar at 9:08 a.m. in New York, from 97.31 yesterday, after touching 90.93, the strongest level since August 1995. The yen climbed 6.9 percent to 117.25 per euro from 125.89. It gained as much as 9.6 percent, the most on an intraday basis since the euro's inception in 1999. It touched 113.81, the strongest since May 2002. The dollar rose 2.2 percent to $1.2647 per euro after touching $1.2497, the strongest since October 2006.

Japan's currency rose 8.9 percent this week against the dollar, the biggest gain since October 1998. It surged 14 percent against the euro, the biggest weekly advance since the 15-nation currency's 1999 debut. The euro headed for a 6 percent decline versus the dollar, its biggest loss ever.

Dollar's Gain

The dollar gained against every currency except the yen and the Swiss franc today as investors sought a haven. The U.S. currency appreciated 5.1 percent to 2.3755 Brazilian reais and 2.6 percent to 7.8597 Swedish krona.

The pound fell to $1.5269, the lowest level since August 2002, as the Office for National Statistics said today that U.K. gross domestic product dropped 0.5 percent from the second quarter, the first contraction since 1992. Economists had predicted a 0.2 percent decline, according to the median of 35 forecasts in a Bloomberg News survey. Against the euro, the pound weakened to a record 81.96 pence, from 79.69 pence.

The yen gained 13.5 percent to 57.42 against the Australian dollar and 12.4 percent to 51.51 versus the New Zealand currency on speculation the rout in global stocks will encourage investors to unwind carry trades in which they get funds in a country with low borrowing costs and buy assets where returns are higher. Japan's 0.5 percent target lending rate compares with 6 percent in Australia and 6.5 percent in New Zealand.

Aussie's Weekly Drop

The Aussie lost 19 percent versus the yen this week and one third of its value this month. The kiwi declined 18 percent this week and 28 percent in October.

Volatility on one-month dollar-yen options, a measure of expectations for future price swings, rose to 28.14 percent, the highest since Oct. 13, indicating greater risk market moves may cut carry trade profits. It rose 32.175 percent on Oct. 10, the highest since Bloomberg began compiling data in December 1995.

Trading in futures on the Standard & Poor's 500 Index and the Dow Jones Industrial Average was limited today after declines in the contracts of more than 6 percent triggered a so- called limit-down restriction.

The futures will not trade below 855.20 until U.S. exchanges open for regular trading at 9:30 a.m. New York time, said Jeremy Hughes, a London-based spokesman for the Chicago Mercantile Exchange. Dow Average futures won't trade below the 8,224 level, he said. The ``limit down'' suspension allows both contracts to trade above those levels, he said.

Global Stock Rout

The MSCI World Index of shares lost 3.6 percent. It has fallen 44 percent in 2008 as credit losses and writedowns topped $660 billion in the worst financial crisis since the Great Depression. Europe's Dow Jones Stoxx 600 Index fell 7.1 percent, and the MSCI Asia Pacific Index sank 5.4 percent.

``There's a powerful de-leveraging and risk-aversion dynamic globally across all financial markets and that's helping prompt the strengthening of the yen,'' said Robert Minikin, a currency strategist with Standard Chartered in London. ``We're seeing a lot of weakness in higher-yielding currencies and the yen is performing well. As balance sheets shrink and assets are repatriated, that can help the U.S. dollar.''

The yen touched a post-World War II high of 79.75 against the dollar on April 19, 1995, prompting the Group of Seven nations to intervene that year by buying the greenback to stabilize currency markets. The G-7 is comprised of Canada, France, Germany, Italy, Japan, the U.K. and the U.S.

Loan Exposure

The euro and the pound may weaken because European and U.K. banks have five times as much loan exposure to emerging markets as the U.S. or Japan, with most lending to Eastern Europe, according to Morgan Stanley.

``Part of the reason why euro-dollar continues to drift lower has to do with the rising risk that pressures in Eastern Europe will have a negative boomerang effect on Euroland,'' London-based currency strategists Stephen Jen and Spyros Andreopoulos wrote in a research note yesterday.

European banks' lending to emerging markets is about 21 percent of Europe's GDP and U.K. banks' loans are around 24 percent of national output, compared with 4 percent for the U.S. and 5 percent for Japan, the strategists wrote, citing data from the Bank for International Settlements.

``There are concerns over country risk in Europe,'' said Toshihiko Sakai, head of trading for foreign exchange and financial products in Tokyo at Mitsubishi UFJ Trust & Banking Corp., a unit of Japan's biggest bank. ``Some currencies there appear to be under speculative attack because their banking sectors aren't sufficiently guaranteed by the governments.'' The euro may weaken to parity with the dollar by year-end, he said.

To contact the reporters on this story: Ye Xie in New York at yxie6@bloomberg.net; Agnes Lovasz in London at alovasz@bloomberg.net

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ArcelorMittal South Africa Used `Exploitative' Prices

By Carli Lourens

Oct. 24 (Bloomberg) -- ArcelorMittal South Africa Ltd., the biggest steelmaker in Africa, used its ``overwhelming'' dominance to charge local customers ``exploitative prices,'' Harmony Gold Mining Co. told the Competition Appeal Court.

In rebuttal to ArcelorMittal's attempt to reverse a Competition Tribunal finding that the company overcharged for flat steel, Harmony said the steelmaker demanded prices that bear ``no reasonable relation to prices under competitive conditions.'' ArcelorMittal is also seeking to have a record 691.8 million-rand ($65 million) fine canceled.

``There is entrenched dominance,'' David Unterhalter, counsel for Harmony and co-complainant DRDGold Ltd., told the court in Cape Town today. ``Nothing is going to make this a contestable market.''

The Competition Tribunal didn't establish or quantify the ``economic value'' of the flat steel ArcelorMittal sold and therefore couldn't prove that the prices were excessive, the steelmaker argued yesterday. South African law bans a dominant company from charging an excessive price, defined as a price for a product that bears no reasonable relation to the economic value of that product.

``Superdominance in itself tells you nothing about whether the price is at economic value'' or higher, Robert Peterson told the court yesterday.

`Not the Clearest'

Peterson, an advocate, is one of two so-called amici requested by the judge to give their view of the interpretation of part of South Africa's competition law and its general application to cases of alleged excessive pricing. The amici are not remunerated.

The Competition Tribunal's determination of excessive pricing ``is not the clearest determination I've ever encountered as a judge,'' Judge Dennis Davis said. The antitrust body ``reached their conclusions long before them came to the Act,'' the judge also said.

ArcelorMittal South Africa, based in Vanderbijlpark, says it sets domestic charges based on a basket of prices for the metal in developed and developing countries. Four years of talks with the government to reduce the cost of steel to local users ended without a resolution and were described as a ``sham'' by the tribunal.

ArcelorMittal exercised the full extent of its market power, Unterhalter told the court. The company has a share ``of the order of 80 percent'' of the local market and is probably in the bottom 10 percent of steel producers in terms of the cost of producing the material, he said.

The steelmaker isn't ``assailed'' by competition from imports, because by its own admission it is in a ``naturally protected'' market, Unterhalter said. At the southern tip of Africa, the company is far from any significant rivals, he said.

ArcelorMittal South Africa fell 3 rand, or 3.6 percent, to 80 rand as of 2:10 p.m. in Johannesburg, giving the company a value of 35.7 billion rand.

To contact the reporter on this story: Carli Lourens in Johannesburg at clourens@bloomberg.net

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Copper, Lead Are Poised for Biggest Weekly Declines Since 1980s

By Claudia Carpenter

Oct. 24 (Bloomberg) -- Copper and lead were poised for their biggest weekly declines since the 1980s while aluminum dropped the most in two years as consumer demand for cars and houses crumbles amid the widening world economic slowdown.

Copper, used in wires and pipes, sank 22 percent this week and lead, a raw material for car batteries, tumbled 20 percent. Toyota Motor Corp., the world's second-largest automaker, reported its first drop in quarterly sales in seven years. Volvo AB, the second-biggest heavy-truck maker, said it expects a 10 percent drop in the North American market this year.

``The most important factors for industrial metals are construction and auto manufacturing and those two have been hit,'' Commerzbank AG analyst Eugen Weinberg said in Frankfurt. A car contains about 300 pounds (130 kilograms) of aluminum, according to Commerzbank.

All industrial metals on the London Metal Exchange declined. Copper dropped every day this week, pulling prices down the most since at least April 1986. The metal lost 7.5 percent today to $3,740 a metric ton by 12:22 p.m. on the LME.

Lead for three-month delivery fell $126 to $1,161 a ton. Aluminum tumbled $62, or 3.1 percent, to $1,945 a ton, or a 12 percent drop for the week, the most since May 19, 2006.

Copper may drop to $3,500 by next week, Michael Khosrowpour, an analyst at Triland Metals Ltd., said in London. Aluminum may fall to $1,900 a ton over the same period, he said.

Prices extended declines as shares tumbled around the world and the dollar gained, making metals more expensive for buyers using other currencies. Japan's Nikkei 225 Stock Average closed just 41 points from the lowest since 1982.

First In, First Out

``The U.S. entered recession first, the thinking is it will be out of recession first and the rest of the world is going to get worse and worse,'' said Robin Bhar, an analyst at Calyon in London.

Stockpiles of copper in warehouses monitored by the LME gained 2,725 tons, or 1.3 percent, to 211,975 tons, the biggest jump since Oct. 7.

All of the gains were in the Netherlands, Spain and the U.S., while inventories dropped in South Korea, a location used to store metal for buyers in China, the world's largest user of copper. Inventories in warehouses monitored by the Shanghai Futures Exchange declined 11 percent in the week ended yesterday.

Copper consumption in China will rise between 5 percent and 6 percent next year, from 5.1 percent this year, Paul Robinson, manager of nonferrous metals research at London-based research company CRU, said yesterday. Contracts for the metal on the Shanghai Futures Exchange were suspended today after falling by their limit for the past three days.

Zinc slid $94 to $1,106, tin dropped $1,150 to $10,850 a ton and nickel declined $426 to $8,924 a ton.

Tin supply is forecast to fall short of demand by 20,000 tons, according to the St. Albans, England-based industry group ITRI Ltd. ``It will take a major decline in world demand to eliminate this,'' said Peter Kettle, ITRI research manager.

To contact the reporter on this story: Claudia Carpenter in London at ccarpenter2@bloomberg.net or ccarpenter2@bloomberg.net



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Palm Oil Slumps to Three-Year Low as Crude Oil Extends Decline

By Glenys Sim

Oct. 24 (Bloomberg) -- Palm oil futures in Kuala Lumpur slumped as much as 12.4 percent to the lowest in more than three years as crude oil tumbled on speculation an OPEC output cut would fail to stem price declines.

Palm oil for January delivery fell to 1,358 ringgit ($379) a ton on the Malaysia Derivatives Exchange, the lowest since August 2005. Futures traded at 1,367 ringgit at 5:35 p.m. in Singapore.

The edible oil, used mainly in food, tracks crude oil as analysts consider it viable for use as a biofuel when oil rises above $80 a barrel. Crude in New York fell as much as 7.1 percent after OPEC agreed to cut production by 1.5 million barrels a day from November.

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

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Gold Heads for Biggest Weekly Drop in Over 28 Years on Dollar

By Marianne Stigset

Oct. 24 (Bloomberg) -- Gold headed for its steepest weekly decline in more than a quarter-century in London as the rising dollar and plunging equities curbed investor demand for the precious metal.

Gold has dropped as much as 13 percent this week, the biggest drop since the week ended March 14, 1980. Trading in futures on the Standard & Poor's 500 Index and the Dow Jones Industrial Average slumped by their daily limit on deepening concern the global economic slump will crimp earnings. The FTSE 100 Index sank 9.1 percent in London and the pound slid the most versus the dollar since 1971 after the U.K. economy shrank for the first time since 1992.

``It's a case of throwing the baby out with the bath water -- everything is just being sold,'' said Mark O'Byrne, managing director of brokerage Gold and Silver Investments Ltd. in Dublin. ``There's wholesale deleveraging going on. People are just going to cash.''

Gold for immediate delivery fell as much as $39.04, or 5.4 percent, to $682.41 an ounce, the lowest in over a year compared with intraday prices. It stood at $695.65 an ounce as of 12:34 p.m. in London. Gold futures for December dropped $18.70, or 2.6 percent, to $696 in electronic trading on the Comex division of the New York Mercantile Exchange.

``Any financial market movements are being interpreted as bearish for precious metals,'' Walter de Wet, an analyst at Standard Bank Ltd. in Johannesburg, wrote in a note today. ``The worst culprit is the greenback.''

Stocks Slump

Gold slipped to $692 an ounce in the morning ``fixing'' in London, used by some mining companies to sell production, from $720 at the previous afternoon fixing.

The MSCI World Index lost 3.7 percent, extending this week's retreat to 7.7 percent. The index has plunged 45 percent in 2008, heading for the biggest yearly drop on record, as credit-related losses and writedowns topped $660 billion in the worst financial crisis since the Great Depression.

Investment in the SPDR Gold Trust, the biggest exchange- traded fund backed by bullion, has stalled after reaching a record 770.6 tons on Oct. 10. Holdings fell to 747.1 metric tons yesterday.

``The decline in the gold price is not only linked to a further strengthening in the U.S. dollar but also evidence that physical buying of gold via ETFs is beginning to fade,'' Deutsche Bank AG analysts led by Michael Lewis wrote in a report today. ``We estimate fair value for gold to be $600-$620 an ounce.''

Platinum Falls

ETF Securities Ltd., a provider of contracts tracking commodities, said the gold assets held by the company fell to 1.478 million ounces from 1.479 million ounces the previous day, according to data posted on the company's Web site.

Platinum declined $32.15, or 4 percent, to $778.35 an ounce, more than a four-year low.

Platinum futures in Tokyo sank 16 percent this week amid mounting concern that plunging auto sales would cut use in catalytic converters. Toyota Motor Corp., the world's second- largest automaker, reported its first drop in quarterly sales in seven years today. Volvo AB, the second-biggest heavy-truck maker, expects a 10 percent cut in the North American market this year.

``The most important factors for industrial metals are construction and auto manufacturing and those two have been hit,'' Commerzbank AG analyst Eugen Weinberg said in Frankfurt.

Among other metals for immediate delivery, silver dropped as much as 99.75 cents, or 10 percent, to $8.6825 an ounce, the lowest since December 2005. Palladium slipped $1.25, or 0.7 percent, to $170.75 an ounce.

Platinum fell to $768 an ounce in the morning fixing in London from $790 at the previous afternoon fixing. Palladium gained to $172.00 an ounce, from $171.00.

To contact the reporter on this story: Marianne Stigset in Oslo at mstigset@bloomberg.net

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German Stocks Drop Most in 19 Years; Daimler, MAN, VW Decline

By Stefanie Haxel

Oct. 24 (Bloomberg) -- German stocks plunged the most in 19 years as investor concern deepened a global economic cooldown will weigh on corporate profits.

MAN AG, Europe's third-largest truckmaker, tumbled to the lowest in more than three years after Volvo AB cut its outlook and Scania AB reported profit figures that trailed analysts' estimates. Daimler AG fell to a 12-year low as several analysts reduced their share-price estimates for the world's largest truckmaker and Oddo & Cie downgraded the shares.

The DAX Index declined 394.77, or 8.7 percent, to 4,124.93 as of 2:36 p.m. in Frankfurt, the lowest since October 1998. DAX Index futures expiring in December lost 8.2 percent. The HDAX Index of the country's 110 biggest companies fell 8.2 percent.

``There's uncertainty about how deep the recession will become and how long it may last,'' said Philipp Musil, who helps oversee 11 billion euros ($14 billion) at Constantia Privatbank in Vienna. ``Investors are extremely unsettled and are selling blindly. There's some panic in the market.''

The DAX Index is heading for a 14 percent drop this week. The benchmark for German equities has fallen 49 percent this year on concern that bank bailouts in the U.S. and Europe won't prevent a recession. Analysts lowered profit forecasts this year as credit-related losses and writedowns topped $660 billion in the worst financial crisis since the Great Depression.

MAN dropped 3.11 euros, or 8.8 percent, to 32.43 euros, the lowest since May 2005.

Volvo, Scania

Volvo forecast the European market for heavy trucks may be flat this year, while North America will contract by 10 percent. Previously, Volvo anticipated Europe to expand 23 percent and North America to be unchanged. Volvo, based in Gothenburg, Sweden, fell as much as 23 percent in Stockholm trading today.

Scania AB, Sweden's second-largest truckmaker, dropped as much as 14 percent, after posting third-quarter profit that trailed analyst estimates as European customers become more cautious ordering new equipment.

European sales of trucks weighing 16 metric tons or more in September fell 4.8 percent as the credit crisis and concern that a recession is coming deterred companies from expanding fleets.

Volkswagen AG plunged 25 euros, or 11 percent, to 204, the lowest in six weeks.

Europe's largest carmaker said vehicle sales rose 3.9 percent in the first nine months because of growth in emerging economies and the introduction of new models. The company said it's sticking to a goal of selling more cars this year.

Daimler Cut

Daimler declined 2.38 euros, or 10 percent, to 21.45, the lowest since November 1998. Oddo lowered its recommendation on the luxury-car and truckmaker to ``reduce'' from ``add'' after Daimler yesterday scrapped its full-year profit forecast by 1 billion euros ($1.3 billion) on plunging auto sales.

Separately, analysts at Citigroup Inc., UBS AG and UniCredit Markets & Investment Banking reduced their share-price estimates on the stock.

Siemens AG dropped 4.12 euros, or 9.5 percent, to 39.40. WestLB AG downgraded Europe's largest engineering company to ``hold'' from ``add,'' saying power and industrial markets may be undergoing a rapid swing away from boom times.

The following stocks also rose or fell in German markets. Symbols are in parentheses.

Allianz SE (ALV GY) lost 6.62 euros, or 10 percent, to 59.17 euros, the lowest since May 2003. Societe Generale SA cut its recommendation for Europe's largest insurer to ``hold'' from ``buy'' and lowered its share-price estimate 46 percent to 75 euros.

BASF SE (BAS GY) fell a third day, losing 1.8 euros, or 7.6 percent, to 21.65. JPMorgan Chase & Co. cut its recommendation on shares of the world's largest chemical maker to ``neutral'' from ``overweight.''

Deutsche Post AG (DPW GY) slipped 54 cents, or 5.4 percent, to 9.42 euros, the lowest since April 2003. ING Groep NV cut its recommendation on shares of Europe's biggest postal service to ``sell'' from ``buy,'' citing declining airfreight growth and the possibility of a ``severe economic downturn.''

Continental AG (CON GY), Europe's second-largest car-parts maker, retreated 4.64 euros, or 12 percent, to 34.36, the lowest in more than four years. Schaeffler Group's owners may sell as much as 25 percent of the auto supplier to investors to alleviate the financial burden of its takeover of Continental amid the credit crisis, Sueddeutsche Zeitung reported, citing unidentified bankers.

HeidelbergCement AG (HEI GY) slumped 3.80 euros, or 6.2 percent, to 57.68, the lowest in more than three years. The country's biggest cement maker had its long-term debt rating lowered to junk at Moody's Investors Service.

Infineon Technologies AG (IFX GY), Europe's second-largest chipmaker, tumbled 29 cents, or 11 percent, to 2.28 euros, an eight-year low. Competitor Samsung Electronics Co., Asia's largest maker of chips, flat screens and mobile phones, posted its biggest profit drop in more than three years as oversupply drove down prices of semiconductors and displays.

Norddeutsche Affinerie AG (NDA GY), Europe's largest copper refiner, dropped 4 euros, or 15 percent, to 23.08, the lowest in 10 months. Copper, used in wires and pipes, sank 22 percent this week, poised for its biggest weekly decline since the 1980s as consumer demand for cars and houses crumbles.

Nordex AG (NDX1 GY), a windmill maker, lost 1.29 euros, or 12 percent, to 9.17 euros, the lowest in more than two years.

``Market expectations are too high,'' said Patrick Hummel, an analyst at UBS AG in Frankfurt who rates the stock a ``sell.'' ``The company forecast to grow 50 percent next year, which can be ruled out given the financing problems of its customers.''

Though renewable energy stocks are more crisis-resistant due to government subsidies than others, it would be ``naïve to believe the sector would be the only one to continue to grow in a double-digit range,'' Hummel said.

Roth & Rau AG, the world's largest maker of equipment used to coat solar panels, lost 2.1 euros, or 14 percent, to 12.80. Repower Systems AG, a wind-turbine maker, lost 10.78 euros, or 11 percent, to 84.97.

Software AG (SOW GY) gained 55 cents, or 1.8 percent, to 31.55 euros. Germany's largest software maker, will cut its net debt to zero by the end of next year and the financial crisis has not affected its business so far, Chief Financial Officer Arnd Zinnhardt said.

Third-quarter net income climbed 62 percent to 31 million euros, beating a 24.7 million-euro median estimate of analysts, Software AG said earlier today.

To contact the reporters on this story: Stefanie Haxel in Frankfurt at shaxel@bloomberg.net.



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Global Stocks, U.S. Futures Fall, Led by Carmakers; Yen Rallies

By Sarah Jones

Oct. 24 (Bloomberg) -- Stocks tumbled around the world and U.S. futures fell on concern the global economic slump will crimp earnings. Treasuries rose as investors sought the safest assets, and the yen climbed to a 13-year high against the dollar.

Trading in futures on the Standard & Poor's 500 Index and the Dow Jones Industrial Average was limited to prevent contracts from further declines after drops of more than 6 percent. The U.K.'s FTSE 100 Index sank 8 percent and the pound slid the most versus the dollar since 1971 after the economy shrank for the first time since 1992. South Korea's Kospi Index slumped 10 percent as the country's economy grew at the slowest pace in four years.

The MSCI World Index lost 3.8 percent to 876.09 at 2:05 p.m. in London, extending this week's retreat to 8 percent. Futures on the S&P 500 expiring in December fell 6.6 percent to 855.2, reaching the ``limit down'' level.

``The panic levels are now quite unseen,'' said Christian Gattiker, Zurich-based head of equity research at Bank Julius Baer & Co. which manages about $307.6 billion globally. ``It's difficult to have any words for this situation right now.''

The MSCI World has plunged 45 percent in 2008, headed for its worst year on record, as credit-related losses and writedowns topped $660 billion in the worst financial crisis since the Great Depression. More than $10 trillion has been erased from the market value of equities so far this month, accounting for about one-third of the total value wiped off world equities this year.

Toyota Motor Corp. tumbled 6.4 percent following its first drop in quarterly sales in seven years. PSA Peugeot Citroen slipped 8.2 percent after cutting its forecast. General Motors Corp. slid 11 percent.

NYSE Trading

Trading below the ``limit down'' level for the S&P 500 futures will resume when U.S. exchanges open for regular trading at 9:30 a.m. New York time, said Jeremy Hughes, a London-based spokesman for the Chicago Mercantile Exchange.

The New York Stock Exchange will open for trading today, said Richard Adamonis, New York-based spokesman for the exchange.

Russia's Micex Stock Exchange suspended trading until next week after shares slumped as much as 15 percent.

Europe's Dow Jones Stoxx 600 Index slid 8.5 percent as Air France-KLM Group said it will struggle to meet profit targets. The MSCI Asia Pacific Index sank 5.6 percent.

The yen climbed against the dollar today as the risk of a global recession prompted investors to slash carry trades, in which they fund purchases of higher-yielding assets with the Japanese currency.

Treasuries Rally

Treasuries rose, sending the yield on the 30-year bond to the lowest since regular issuance of the securities began in 1977.

The pound tumbled below $1.53 in its biggest drop in at least 37 years after a report showed the U.K. economy contracted more than forecast in the third quarter, bringing the nation to the brink of a recession.

Another report showed Europe's manufacturing and service industries contracted at a record pace in October.

A measure of banks' willingness to lend, the London interbank offered rate for overnight dollars, rose for a second day after declining for nine days. The Libor-OIS spread, a gauge of cash availability that measures the difference between the three-month rate and the overnight indexed swap rate, widened 8 basis points to 262 basis points, the British Bankers' Association said.

Volatility Climbs

The VStoxx Index, which measures the cost of using options as insurance against drops in the Dow Jones Euro Stoxx 50 Index, rose as much as 34 percent to 86.61, a six-day high. The cost of protecting corporate bonds from default surged by a record.

Toyota sank 6.4 percent to 3,200 yen. The world's second- largest automaker reported a decline in quarterly sales for the first time in seven years as the financial crisis crippled worldwide auto demand.

Toyota sold about 2.236 million vehicles worldwide in the three months ended Sept. 30, down 4.3 percent from a year earlier.

``Automakers are being hit in terms of growth,'' said Amandine Gerard, a fund manager at KBL Richelieu Gestion in Paris, which oversees $5.1 billion. ``Job cuts and new models aren't sufficient. The industry is directly hurt by the slowdown.''

Peugeot retreated 8.2 percent to 16.435 euros after Europe's second-biggest carmaker cut its full-year sales and earnings targets. Third-quarter sales dropped 5.2 percent to 13.3 billion euros ($17 billion) amid a European auto-market slump.

The company said its full-year operating profit will amount to 1.3 percent of revenue, abandoning a 3.5 percent target, while vehicle sales probably will fall 3.5 percent.

GM, Ford

GM fell 11 percent to $5.40. The company reiterated today that bankruptcy is ``not an option.''

Speculation regarding GM's financial stability is unfounded, spokesman Tony Cervone said in an interview.

Ford Motor Co., the second-biggest U.S. carmaker, retreated 7 percent to $1.86.

Volvo AB sank 19 percent to 35.10 kronor. The world's second-largest maker of heavy trucks cut its industry growth outlook for this year after curtailing production as demand slows and some customers struggle to finance the purchase of new equipment. The European market for heavy trucks may be unchanged this year, while North America will contract by 10 percent, Volvo said.

Air France dropped 8.2 percent to 10.89 euros after Europe's biggest airline said it will be ``very difficult'' to meet its 1 billion-euro operating-profit target for the 12 months through March 2009.

Cutting Forecast

Analysts have cut profit forecasts this year as the credit turmoil spread, threatening economic growth. Earnings for companies in Europe's Stoxx 600 will decline 4.4 percent in 2008, down from 11 percent growth predicted the start of the year, according to estimates compiled by Bloomberg.

Anglo American Plc and Total SA led a retreat by commodity producers as base metals fell in London and crude oil dropped after OPEC agreed to cut oil production for the first time in almost two years.

Anglo American, the world's fourth-biggest diversified mining company, lost 6.6 percent to 1,158 pence as copper dropped for a fifth day. Rio Tinto, the world's third-biggest mining company, declined 7.6 percent to 2,069 pence.

Lead, nickel, tin and zinc also retreated on the London Metal Exchange.

Total, Europe's third-biggest oil company, fell 10 percent to 33.635 euros. Royal Dutch Shell Plc, Europe's largest oil company, declined 9.7 percent to 1,400 pence.

Crude Slumps

Crude for December delivery dropped as much as 7.1 percent to $63.05 a barrel on the New York Mercantile Exchange after 13 OPEC nations decided to reduce supply by 1.5 million barrels a day at a meeting in Vienna today.

HSBC Holdings Plc, Europe's largest bank, tumbled 16 percent to 676 pence. Morgan Stanley slashed its price estimate for the shares in Hong Kong by 25 percent as the contagion from the global turmoil spreads to Asia. The brokerage also lowered its price target for the London shares by 7.9 percent to 580 pence.

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

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Celestica, EnCana, Magna, Harry Winston: Canada Stock Preview

By John Kipphoff

Oct. 24 (Bloomberg) -- The following companies may have unusual price changes in Canadian trading today. Stock symbols are in parentheses, and share prices are from yesterday's close in Toronto.

The Standard & Poor's/TSX Composite Index rose 1 percent to 9,331.35. Canada's main stock benchmark has fallen 2.4 percent in four days and is poised for a 21 percent drop in October, its steepest monthly decline since the October 1987 crash.

Stocks in Asia and Europe tumbled. U.S. stock futures dropped, sending contracts on the Dow Jones Industrial Average and the Standard & Poor's 500 Index down by their daily limit, as lower sales and profits at automakers and technology companies stoked concern that the financial crisis will cause a global recession.

Diamond miners, explorers and retailers may be active after RBC Capital Markets lowered its diamond price forecast by 10 percent for the next two years with Christmas sales in the U.S. expected to be ``disappointing.'' Harry Winston Diamond Corp. (HW CN) fell 1.5 percent to C$9.66. Shore Gold Inc. (SGF CN) dropped 15 percent to 61 cents. Stornoway Diamond Corp. (SWY CN) added 9.1 percent to 12 cents.

Energy companies may fall after crude oil extended its drop on speculation a potential OPEC output cut will fail to stave off price declines. EnCana Corp. (ECA CN) gained 8.5 percent to C$55.05. Suncor Energy Inc. (SU CN) fell 1 percent to C$26.20. Canadian Natural Resources Ltd. (CNQ CN) advanced 3.6 percent to C$51.02. Canadian Oil Sands Trust (COS-U CN) rose 2.2 percent to C$27.80. Imperial Oil Ltd. (IMO CN) gained 7.2 percent to C$39.11.

Celestica Inc. (CLS CN): The maker of electronic parts said it expects to earn as much as 24 cents a share in the fourth quarter. Analysts, on average, anticipated profit of 19 cents, according to a Bloomberg survey. The shares fell 0.9 percent to C$4.68.

Magna International Inc. (MG/A CN): North America's biggest auto-parts maker had its share-price estimate cut 23 percent to $50 (C$63.45) by UBS AG analyst Fadi Chamoun in Toronto, who cited falling North American production. The shares fell 2.9 percent to C$39.77.

To contact the reporter on this story: John Kipphoff in Toronto at jkipphoff@bloomberg.net.

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Banorte, Bimbo, Cosan, Televisa, Vale: Latin Equity Preview

By Paulo Winterstein and William Freebairn

Oct. 24 (Bloomberg) -- The following companies may have unusual price changes today in Latin America trading. Stock symbols are in parentheses, and share prices are from the previous close. Preferred shares are usually the most-traded class of stock in Brazil.

Brazil's Bovespa index futures dropped 7.4 percent to 31,660 at 8:37 a.m. in New York. The MSCI Latin America Index fell 1.5 percent to 1,873.05 yesterday.

Brazil

Banco Panamericano SA (BPNM4 BS): Media owner and controlling shareholder Silvio Santos will convert 10.91 million Panamericano common shares into the same amount of preferred ones, the Sao Paulo-based bank said in a filing yesterday. After the transaction, the bank will have 131.9 million common shares and 119.5 million preferred shares outstanding. Panamericano preferred shares fell 3.3 percent to 2.90 reais. Common shares aren't traded.

Cremer SA (CREM3 BS): The Brazilian maker of medical supplies was upgraded to ``buy'' from ``neutral'' at Merrill Lynch & Co., which said the Brazilian maker of medical supplies may report ``solid'' third- quarter earnings. Cremer gained 11 percent to 8.37 reais.

Cia. Vale do Rio Doce (VALE5 BS): The world's biggest iron- ore exporter said third-quarter net income surged 64 percent to $4.82 billion. A year earlier, net income was $2.94 billion, based on U.S. accounting standards, Vale said yesterday in a statement. Sales rose 49 percent to $12.12 billion, from $8.12 billion. Vale fell 3.3 percent to 23.30 reais.

Cosan SA Industria & Comercio (CSAN3 BS) and Sao Martinho SA (SMTO3 BS): Brazil's government may help finance the sugar and ethanol industry, Agencia Estado reported yesterday, citing Dilma Rousseff, President Luiz Inacio Lula da Silva's chief of staff. Estado didn't give details and reported that Rouseff said private banks must be the producers' first recourse. Cosan and Sao Martinho are Brazil's largest publicly traded sugar and ethanol producers. Cosan fell 4.3 percent to 10.10 reais. Sao Martinho fell 15 percent to 11 reais.

Sadia SA (SDIA4 BS), Lojas Americanas SA (LAME4 BS) and GP Investments Ltd. (GPIV11 BS): Sadia, Brazil's second-biggest food company, retailer Lojas Americanas and private equity company GP Investments will likely report ``weak'' third-quarter earnings, Itau Corretora said. Losses from currency derivatives and higher financing costs will likely cause the three companies to report net losses, reversing profit from the year-earlier period. Sadia, which reports Oct. 29, fell 3.7 percent to 4.48 reais. Lojas Americanas rose 5 percent to 5.25 reais. GP fell 0.7 percent to 6.80 reais. Lojas Americanas and GP report next month.

Chile

Sociedad Quimica y Minera de Chile SA (SQM/B CC): Potash Corp. of Saskatchewan Inc., the world's largest producer of crop nutrients by market value, said third-quarter profit increased fivefold as fertilizer prices advanced. Soquimich, as Chile's biggest fertilizer is known, fell 3.4 percent, or 11,526 pesos.

Mexico

Grupo Bimbo SAB (BIMBOA MM): Mexico's largest maker of bread reported a 9 percent gain in third-quarter profit as price increases offset higher commodity prices. Net income rose to 1.36 million pesos and sales gained 12 percent to 20.6 billion pesos, the company said in a filing yesterday. Bimbo fell 3.9 percent to 54.73 pesos.

Grupo Financiero Banorte SAB (GFNORTEO MM): Mexico's biggest publicly traded bank said third-quarter net income rose 15 percent to 2 billion pesos, or 1 peso a share, from a year earlier. The company was expected to earn 99 centavos a share, according to the median estimate of seven analysts surveyed by Bloomberg. Banorte fell 1.4 percent to 21.33 pesos.

Grupo Televisa SA (TLEVICPO MM): The world's largest Spanish-language broadcaster said third-quarter profit fell as broadcast advertising revenue growth slowed with Mexico's economy. Net income declined 9.6 percent to 2.07 billion pesos ($155.6 million), Televisa said yesterday in a statement. Sales rose 21 percent to 12.5 billion pesos. Analysts projected 2.38 billion pesos in net income and 12.58 billion pesos in sales, the averages of three estimates in a Bloomberg survey. Televisa fell 5 percent to 38.22 pesos.

To contact the reporters on this story: Paulo Winterstein in Sao Paulo at pwinterstein@bloomberg.net. William Freebairn in Mexico City at wfreebairn@bloomberg.net.

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U.S. Stock Futures Plunge by Daily Limits on Economic Concern

By Michael Patterson and Elizabeth Stanton

Oct. 24 (Bloomberg) -- U.S. stock-index futures plunged by their daily limits after slumping earnings at automakers and technology companies spurred concern the financial crisis has infected the broader economy.

General Motors Corp. declined 13 percent and Ford Motor Co. lost 10 percent after Toyota Motor Corp., the world's second- largest automaker, reported its first sales decline in seven years. Apple Inc. fell 8.4 percent as Samsung Electronics Co., Asia's biggest maker of chips and mobile phones, had its steepest profit drop in more than three years. Exxon Mobil Corp. lost 8.2 percent as oil and gasoline prices retreated.

``It's the spillover of the banking crisis into real economies around the world,'' said Michael Mullaney, a Boston- based money manager at Fiduciary Trust Co., which oversees $10 billion. ``Everything's going down hard. Diversification is not working right now, that's what it amounts to. We're throwing everything out.''

Standard & Poor's 500 Index futures expiring in December fell 60 points, or 6.6 percent, to 855.20 as of 9:11 a.m. in New York. The SPDR Trust Series 1, an exchange-traded fund tracking the S&P 500 that was not subject to the trading limit, slumped 8.9 percent to $83.54. Dow futures dropped 550, or 6.3 percent, to 8,224, while Nasdaq-100 Index futures retreated 85, or 6.8 percent, to 1,168.50.

`Limit Down'

S&P 500 futures will not trade below 855.20 until U.S. exchanges open for regular trading at 9:30 a.m. New York time, said Jeremy Hughes, a London-based spokesman for the Chicago Mercantile Exchange. Dow Average futures won't trade below 8,224, while Nasdaq-100 futures won't fall below 1,168.50, he said. The ``limit down'' suspension allows both contracts to trade above those levels, he said.

The New York Stock Exchange plans to open for U.S. trading today, spokesman Richard Adamonis said.

Under so-called circuit-breaker rules, the NYSE will halt trading for 30 minutes if the Dow drops 1,100 points before 2 p.m. A 2,200-point decline before 1 p.m. will halt trading for two hours, while a 3,350-point slide will close trading for the remainder of the day.

Today is the 79th anniversary of ``Black Thursday,'' the first of three sell-offs on the New York Stock Exchange that erased a quarter of the Dow average's value over five days.

Some investors speculated that today's declines were being exacerbated by hedge funds facing margin calls, or demands to repay borrowed money used to buy shares.

`Forced Selling'

``This must be forced selling, probably hedge funds,'' said Nick Sargen, chief officer at Fort Washington Investment Advisors, which oversees $30 billion in Cincinnati. ``A rational investor, and I emphasize rational, wouldn't be selling now.''

The MSCI All-Country World Index, a gauge of equity markets in 48 developed and emerging nations, has tumbled 47 percent this year as a freeze in credit markets sparked by $659 billion of asset writedowns and credit losses at banks raised concern that the global economy is headed for a recession. About $30 trillion of market value has been erased from global equities in 2008, according to data compiled by Bloomberg.

Europe's Dow Jones Stoxx 600 Index slumped 7.4 percent today and the MSCI Asia Pacific Index sank 5.2 percent.

The S&P 500 has declined 3.5 percent this week, while the Dow average has dropped 1.8 percent. The Nasdaq Composite Index is down 6.3 percent.

GM, the biggest U.S. automaker, dropped to $5.30 today and Ford, the second-largest, declined to $1.81.

GM reiterated today that bankruptcy is ``not an option'' for the company. Speculation regarding GM's financial stability is unfounded, spokesman Tony Cervone said in an interview.

Toyota Sales

Toyota sold about 2.236 million vehicles worldwide in the three months ended Sept. 30, down 4.3 percent from 2.336 million a year earlier. GM will release its third-quarter sales figure on Oct. 29.

Volvo AB, the world's second-largest maker of heavy trucks, cut its industry growth outlook for this year, and PSA Peugeot Citroen, Europe's second-biggest carmaker, cut its full-year targets.

Apple, the maker of iPhones and iPods, dropped $8.21 to $90.02. Intel Corp., the world's largest chipmaker, declined 6.6 percent to $13.55. Samsung's profit tumbled as oversupply drove down prices of semiconductors.

Earnings at the 200 companies in the S&P 500 that reported third-quarter results so far dropped by an average of 23 percent, trailing analysts' expectations by 1.6 percent, according to data compiled by Bloomberg.

GE Declines

General Electric Co., the economic bellwether whose products range from power-plant turbines to locomotives, dropped 5.9 percent to $17.70. The company said it plans to use the Federal Reserve's short-term funding facility when it starts next week.

American International Group Inc. declined 14 percent to $1.81. The insurer said it has used $90.3 billion of a U.S. government credit line since it was bailed out last month, an amount that exceeds the size of the original loan meant to save the company.

Microsoft Corp. retreated 6.1 percent to $20.96 even as the world's largest software maker reported profit and sales that beat analysts' projections.

Exxon, Chevron

Exxon, the biggest U.S. oil company, declined to $65.86. Chevron Corp., the second-largest, lost $5.79 to $64.60.

Crude oil lost 6.9 percent to $63.18, copper dropped 7.6 percent and corn lost 4.2 percent. An S&P GSCI index of 24 raw materials has dropped 35 percent since September, poised for a record quarterly decline.

The U.K.'s FTSE 100 Index dropped 7.4 percent after the economy shrank for the first time since 1992. South Korea's Kospi Index sank 11 percent as the country's economy grew at the slowest pace in four years. Russia's Micex Stock Exchange suspended trading until next week.

The yen climbed to a 13-year high against the dollar as the prospect of a global recession prompted investors to dump higher-yielding assets funded in Japan. The dollar rose to a two-year high versus the euro.

To contact the reporters on this story: Michael Patterson in London at mpatterson10@bloomberg.net; Elizabeth Stanton in New York at estanton@bloomberg.net

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Dollar and Yen are surging as investors sharply reduced riskier assets

Daily Forex Fundamentals | Written by AC-Markets | Oct 24 08 10:33 GMT |

Forex Market Issues and Risks News and Events: The Dollar was lower on Thursday, after earlier climbing to a fresh two-year high against the Euro and a basket of currencies, after aggressive Dollar selling by Brazil's central bank helped lend some stability to emerging market currencies, analysts said. Brazil's central bank twice intervened on the spot market to offer Dollars and said it was ready to sell Dollar swap contracts up to a hefty $50 billion. Emerging markets have been hit by the global financial crisis in recent weeks as Dollar investors offloaded assets in these markets and repatriated the funds. Analysts were skeptical that the calm would be sustainable, with investors wary of a sharp global economic downturn and a poor corporate profit outlook, but investors on Thursday loosened their faith in reserve currencies. Trouble in emerging markets has compounded worries about the outlook for the global economy, with countries such as Hungary and Argentina taking desperate measures to shore up their ailing economies. Such developments have helped the Dollar maintain a safe-haven bid in recent weeks. Both the Dollar and the Yen have surged against higher-yielding currencies this week as risk demand has sharply reduced. Extreme low liquidity has led to severe volatility in most markets, and analysts said currencies remained vulnerable to erratic moves. The Yen has shot up drastically versus the Euro and other high yielders such as the Australian and New Zealand Dollars as investors dumped positions that had used the low-yielding Japanese currency to buy assets in higher-yielding ones. Yesterday, EurUsd was last up 1% at 1.2902, after briefly racing to 1.3006 high. On Wednesday, it hit to a two-year low of 1.2728. EurJpy was last up 0.84% at 125.92, having touched a fresh six-year low of 123.15. UsdJpy was 0.14% down at 97.94 after falling to a 7-month low of 95.94. GbpUsd fell 0.16% to 1.6180, after tumbling to a 5-year low 1.6043. GbpJpy dropped 0.31% to 157.93, having hit 154.54 low. UsdChf was 0.27% lower at 1.1622. Today Key Issues: 07:00 EUR Q3 Unemployment survey 11.3% vs 10.4% 07:00 EUR October French Markit Mfg PMI 40.8 vs 43 07:00 EUR October French Markit Services PMI 48.8 vs 50.1 07:30 EUR October German Markit Services PMI 49.7 vs 50.2 07:00 EUR October German Markit Mfg PMI 43.3 vs 47.4 07:30 DKK October Consumer confidence -16.6 vs -11.1 08:00 EUR October Euro zone Markit comp Flash PMI 44.6 vs 46.9 08:00 EUR October Euro zone Markit Mfg Flash PMI 41.3 vs 45 08:00 EUR October Euro zone Markit Services Flash PMI 46.9 vs 48.4 08:30 GBP Q3 GDP prelim -0.2% vs 0% (qoq) 08:30 GBP Q3 GDP prelim 0.5% vs 1.5% (yoy) 10:45 EUR ECB'b Gozalez-Paramo speaks in Madrid 11:00 CAD September CPI BoC Core 0.3% vs 0.3% (mom) 11:00 CAD September CPI BoC Core 1.7% vs 1.7% (yoy) 11:00 CAD September CPI Inflation 0% vs -0.2% (mom) 11:00 CAD September CPI Inflation 3.4% vs 3.5% (yoy) 14:00 USD September Existing home sales 4930k vs 4910k The Risk Today: EurUsd Market dropped as low as 1.2530 this morning. On the downside, further weakness will open the way down to strong support 1.2490 Trendline. Next long-term support holds 1.1640 November 2005 low. On the upside, only a return over 1.4000 (former trendline support) and 1.5000 will release actual pressure and may put key resistance 1.6000 into focus. Resistance holds 1.4002 former trendline support. Initial resistance holds 1.3769 last week high. GbpUsd Market dropped nearly 10% this week around 1.5500 this morning. This move was following Tuesday break of the low triangle pattern (1.7000) which did open the way through 1.6568 November 2003 low and 61.8% retracement of 1.3682-2.1161 advances. Initial support holds 1.5471 August 2003 low. Following supports are 1.4560 trendline and 1.3682 March 2001 low. On the upside, strong resistance holds 1.7631 last weeks high ahead of 1.8304 former support. UsdJpy Market broke down the lower trendline on September-October downtrend accelerating drop to 92.77 low this morning. Further pressure might open the way down to 96.00 Nov 1994 and 79.70 April 1995 low. On the upside, only a recovery over 103 upper trendline and 105 pivot point will put focus again on 108 and 110.67 15th August high. UsdChf Market posted new high 1.1749 this morning. Further advance may open the way to 1.1895 October 2007 high and strong resistance. On the downside, only weakness below initial support 1.1489 early October high would undermine the current uptrend and reverse through 1.0692 22nd September low and down to 1.0500 and 1.0375. Such a move may look for 1.0013 15th July low in front of 0.9637 17th March low. EURUSD GBPUSD USDJPY USDCHF 1.5000 P 1.9363 S 105.00 S 1.2153 T 1.4867 S 1.8304 M 103.07 M 1.1895 T 1.3500 P 1.7631 S 100.00 P 1.1749 M 1.2660 1.5850 95.00 1.1735 1.2530 M 1.5500 M 96.85 M 1.1246 M 1.2490 T 1.5471 S 95.75 T 1.0692 S 1.1827 T 1.4560 T 92.00 M 1.0500 K S: Strong, M: Minor, T: Trendline, K: Keylevel, P: Pivot ACM FOREX Disclaimer: This report has been prepared by AC Markets (thereof ACM) and is solely been published for informational purposes and is not to be construed as a solicitation or an offer to buy or sell any currency or any other financial instrument. Views expressed in this report may be subject to change without prior notice and may differ or be contrary to opinions expressed by Salesperson or Traders of ACM at any given time. ACM is under no obligation to update or keep current the information herein, the report should not be regarded by recipients as a substitute for the exercise of their own judgment.

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European Market Update

Daily Forex Fundamentals | Written by Trade The News | Oct 24 08 10:12 GMT |

OPEC cuts output production by 1.5M BPD; Carry-related unwinding hits global equity markets; Risk aversion galore ECONOMIC DATA (GE) German Sept Import Price Index M/M: -1.0% v -0/8; Y/Y: 7.6% v 7.8%e (FR) French Oct PMI Manufacturing: 40.8 v 42.3e (lowest reading on record) (FR) French Oct PMI Services:48.8 v 49.0 (SP) Spanish Q3 Unemployment Rate: 11.33% v 11.5% (GE) German Oct PMI Manufacturing: 43.6 v 46e; PMI Services: 49.7 v 48.8e (IT) Italian Oct Business Confidence: 77.7 v 81.7e; Consumer Confidence Indicator:102.2 v 100e (NE) Dutch Aug Consumer Spending: 1.9% v 1.3% prior (EU) Europe Oct PMI Manufacturing: 41.3 v 44.0; PMI Services: 46.9 v 47.0; PMI Composite: 44.6 v 45.4 (UK) 3Q GDP Q/Q: % v -0.2%e; Y/Y: % v 0.5% (UK) Index Aug of Services: % v -0.1% (IN) Indian Central Bank leaves interest rates unchanged as expected, Danish Central Bank raises key rate by 50 bps to 5.50% (Not expected) SPEAKERS/FIXED INCOME/FX/COMMODITIES/ERRATUM In equities: Volvo [VOLVB.SW] Reported Q3 Net SEK1.98B below consensus of SEK3.58Be, Rev SEK69.6B versus SEK70.34Be. The company noted that it saw demand slowdown and cuts its FY08 market forecast. || Peugeot [UG.FR] Lowered its 2008 vehicle forecast to -3.5% v 5.0% prior. It cut its 2008 Operating Margin forecast to 1.3% v 3.5% and added that it planned substantial Production Cuts In Q4, will continue price increases || National Express [NEX.UK] Provided a trading update and maintained its FY outlook. It reported UK Train Revenue remained on track at +9% and that its Spain Revenue on track at 5% || Nest Oil [NES1V.FH] Reported Q3 Op Profit €199M v €158Me, Rev €4.52B v €4.02Be, Cuts FY08 CAPEX to €550M v €600M prior . Its ROE 21.1% v 28.7% y/y and ROC 20.7% v 28.5% y/y|| Scania [SCVA.SW: Reported Q3 Net SEK1.82B below estimates of SEK2.07B. Its revenues were also below expectations wit it coming in at SEK20.43B versus 21.6B estimate. The company noted it could not guide FY09 as future remains 'unclear' . Its 9-month sales came in at SEK66.32B up 11% y/y. || Deutsche Post [DPW.GE] DPW.GE: Provided update on UPS talks regarding DHL unit and noted it remained confident would conclude talks with UPS on DHL by end 2008 although the economic environment was difficult. It reiterated that restructuring costs for U.S. business should be around $2B Speakers: (EU) ECB's Nowotny: Sees room to lower interest rates|| French Fin Min Lagarde: Europe has more room to cut rates than US. She noted that inflation has fallen quickly, but does not see risk of deflation || BoE Sentence stated that the risks of severe recession have increased and economic data supports negative outlook . He noted that construction and property sectors are the weakest. The global economy has slowed significantly in last quarter and hopes that the economy avoids the severe recession possibility || Bank of Korea announced that it would add KRW2T to stabilize financial markets and would continue providing additional liquidity if necessary. It noted that most of liquidity to be provided to securities related firms || German Chancellor Merkel: Will coordinate efforts with China in response to financial turmoil || Japan PM Aso noted that the rapid market moves could have a spillover effect into the real economy. He added that the Japanese economy was not in a “bad condition” || French Pres Sarkozy stated that the EU was planning an ambitious proposal for Nov summit. He added that the financial crisis needs world response. Reiterated that he hopes Asia would l back EU proposal at Nov 15 summit. He added that the financial market crisis began in US but and was now a global crisis. Lastly he noted that the world needs fast Asian growth. In Currencies: market encountered unprecedented volatility in today's session. The risk aversion theme in currencies went into overdrive as carry-related pairs exhibited annual price movements in a matter of hours. GBP breaks below the 1.60 for the first time in 5-years and proceded to test 1.5260; USD/JPY tested below the 95 level, where coordinated intervention took place in 1995 and fell to 90.90. GBP/JPY was off 17 big figures to test 139.00 ||China and South Korea were exploring the possibility of extending bilateral fx swap agreement and would continue to take join action to calm markets. Both countries called for reform of international financial system In Fixed Income: Government bonds made gains in all regions as risk aversion intensified. The US and EUR yield curves continued their steepeing trends whilst the GBP curve was relatively unchanged in terms of shape, with buying seen in Gilts across all maturates. There was a slight flattening tone in JGB's with better buying in the long end of the curve , 20y and 30y yields falling by 2.5bps and 3.4bps respectively Dealers noted that 10 year T- Notes were set to make their biggest weekly gain since 1995, with session highs of 103.23 against a closing price of 100.17 on 10/17. 2 year swap spreads were back through 120bps after starting the week at 107bps, and 5yr swap spreads through 100 after starting the week at 98.25, reflecting the reduced risk appetite in swap markets. The Itraxx Crossover widened to 910bps, a record high Italian Debt Chief: Not a good time to issue short-term and mid-term inflation linked paper In Energy: OPEC President Khelil Confirmed OPEC-11 ceiling reduced by 1,5M bpd, effective Nov 1st. He stated that Oil prices are determined by market forces and reiterates its call on non-members to help in restoring price stability. He added that he was 'fully confident' that OPEC members would respect output cut and expected 1.8M BPS out of the market by end of 2008. He saw 2008 demand growth about 400K bpd. || Saudi Oil Min Naimi confirmed that OPEC would enact a 1.5M bpd production cut effective immediately and noted that no one in OPEC talks about a second further cut but a meeting before December is possible. He reiterates oil prices should be determined by market and that the output cut reflected the mismatch between supply and demand. Hopes that OPEC decision stabilizes market prices. The current crisis was not as bad as in 1998 and that the current financial crisis was not OPEC's fault. OPEC members would are analyzing effect of supply cut prior to December meeting. || Saudi oil min denied that OPEC discussed a two supply reduction options || Nigerian Oil Min: Still no consensus over OPEC decision Note: Nigeria has previously commented that cuts in production would harm state budget expectations || Kuwait Oil Min: OPEC oil cuts should not have effect on global economy NOTES The market encountered unprecedented volatility in today's session. The risk aversion theme in currencies went into overdrive as carry-related pairs exhibited annual price movements in a matter of hours. There was chatter that the US equity markets would not open today spur by suspension in various Asian equities and Russian markets. S. Korea temporarily closed the Kospi temporarily after index drops 10%. European exchanges off 8% to 9%. Today's risk aversion inspired by continued emerging market concerns after the WSJ Reported the IMF is putting 'final touches' on assistance plan for developing nations. The report cites Mexico, Brazil, South Korea and Eastern European nations not running current account deficits as potential recipients of assistance. iTraxx Crossover hitting fresh record highs over 900 bps. OPEC confirmed a 1.5M BPD output cut effective Nov 1st. Treasury's Paulson reportedly planning on purchasing stakes in additional US banks. Dealers noting that perhaps the stage has been set for another coordinated central bank rate cut. Focus now has shifted from the financials to concern about global growth and Asia. 7:00 (CA) Canadian CPI. M/M consensus expectations are ; The prior number was . Y/Y Consensus expectations are ; The prior number was . 7:00 (CA) Bank of Canada CPI Core. M/M consensus expectations are 0.3%; The prior number was 0.3%. Y/Y Consensus expectations are 1.7%; The prior number was 1.7%. 10:00 (US) Sept Existing Home Sales. Consensus expectations are 4.95%; The prior number was 4.91%. Existing Home Sales M/M : Consensus expectations are 0.8%; The prior number was -2.2% Speakers 9:30 (EU ) ECB's Nowotny, and Tumpel-Gugerell to speak in Austria 9:55 (EU) ECB's Trichet to speak in Madrid Trade The News Staff Trade The News, Inc. Legal disclaimer and risk disclosure All information provided by Trade The News (a product of Trade The News, Inc. "referred to as TTN hereafter") is for informational purposes only. Information provided is not meant as investment advice nor is it a recommendation to Buy or Sell securities. Although information is taken from sources deemed reliable, no guarantees or assurances can be made to the accuracy of any information provided. 1. Information can be inaccurate and/or incomplete 2. Information can be mistakenly re-released or be delayed, 3. Information may be incorrect, misread, misinterpreted or misunderstood 4. Human error is a business risk you are willing to assume 5. Technology can crash or be interrupted without notice 6. Trading decisions are the responsibility of traders, not those providing additional information. Trade The News is not liable (financial and/or non-financial) for any losses that may arise from any information provided by TTN. Trading securities involves a high degree of risk, and financial losses can and do occur on a regular basis and are part of the risk of trading and investing.

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Pound, Euro Drop As Global Recession Fears Spur Risk Aversion. Yen Rises To Highest Level Since 1995

Daily Forex Fundamentals | Written by DailyFX | Oct 24 08 10:27 GMT |

Talking Points Japanese Yen: Rises To Highest Level Since 1995 Pound: GDP Contracts For First Time Since 1992 Euro: PMI Falls At Record Pace US Dollar: Risk Aversion To Drive Dollar Sentiment Pound, Euro Drop As Global Recession Fears Spur Risk Aversion. Yen Rises to Highest Level Since 1995 The Pound precipitously dropped throughout the overnight sessions sparked by statements from BoE member Andrew Sentance that the risk of a severe recession has increased. The remarks would foreshadow the U.K. GDP report which showed a 0.5% decline in growth which added to the bearish sterling sentiment and has the Pound trading below 1.5300 and sinking. That news combined with a record low Euro-Zone PMI reading and a near 10% drop in the Nikkei pushed global recession fears to elevated levels. Rising concerns would spark a flight to safety that would see the Yen rise to the highest level since 1995 and the Euro set fresh two year lows. Growth in the U.K. fell to its lowest level since 1992 and after 2Q 0.0% reading the case could be made that a technical recession has already began. The outlook is not much better as the slowdown is expected to deepen in the fourth quarter of 2008 and first of 2009 as the effects of the past month's frozen credit markets are yet to be realized. A 6.1% drop in mining demonstrates the dour outlook for global growth which has driven down commodity prices. Additionally, the index of services fell 0.3%, the sector accounts for 75% of GDP and with the current crisis of confidence we should continue to see weakness in this sector. The BoE is now expected to accelerate the pace of their rate cuts and another coordinated easing could be ahead which could be realized at next week's FOMC rate decision. The picture in the Euro-Zone was just as dour as the October's flash PMI composite reading fell to a record low of 44.6 from 46.9. The manufacturing component dropped to 41.3 from 45.0, while services fell to 46.9 from 48.4. A drop in new orders signal that weakness will continue as the economic region continues to see growth slow. The Euro would fall below 1.25 for the first time in two years as expectations that the central bank will now need to continue easing interest rates to avoid a deeper recession. Indeed, German import prices falling 1.0% will reduce the price stability fears and open the door for a rate reduction. Therefore, we should continue to see weakness in the single currency with the possibility of the EURUSD reaching parity becoming more likely by the minute as interest rate expectations decline. . The Yen continues to rise as the carry trade gets decimated by the prevailing risk aversion that has gripped markets as the outlook for the global economy continues to dim. The USDJPY would fall to 91.00 -its lowest level since 1995- before finding support. The momentum from yesterday's rebound in U.S. equities failed to carry over to Asian and European markets for the first time since the crisis reached its current heightened levels. The EURJPY which is a good gauge of the world economy fell 135.57 to 113.78 in overnight trading signaling that a serious global downturn may be imminent. The growth story is clearly a worldwide issue and with Dow futures trading sharply below fair value we could see continued Yen strength. The U.S. equity markets will most likely follow the lead of the Asian and Europeans indexes and the massive flight to safety should remain a driving force for the dollar today. Now that is clear that the BoE and ECB will need to play catch up with the Fed in easing monetary policy and the pace at which the cuts will come will only add to the current bullish dollar sentiment. Although, the FOMC is expected to lower its benchmark rate to 1%, we don't expect them to keep them at those levels for an extended period of time. After watching former Fed Chairman Alan Greenspan testify in front of Congress yesterday, Chairman Ben Bernanke will most likely not make the same mistake as his predecessor and may look to raise rates as soon as the economy stabilizes. Therefore, we may see the dollar momentum continue for an extended period of time. The existing home sales report to cross the wires today is expected to show a gain in purchase of 0.8% which may add to the dollar bullish story. However, OPEC announcing that they will be cutting production by 1.5 million barrels could end the greenback's current momentum and lead to a short-term retrace at these oversold levels. DailyFX Disclaimer Investment in the currency exchange is highly speculative and should only be done with risk capital. Prices rise and fall and past performance is no assurance of future performance. This website is an information site only. Accordingly we make no warranties or guarantees in respect of the content. 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Major Market Movers: Another Downbeat Week!

Daily Forex Fundamentals | Written by Crown Forex | Oct 24 08 08:28 GMT |

The week is coming to an end and the outlook has merely only darkened in the past five days as Europe is pricing a recession, with further signals pointing south and financial markets continue to be wrapped with heightened alertness and volatility. Investors are pricing more rate cuts to be seen in the US, UK and the Euro Area those three majors in specific, which with dwindling outlook for profit growth for corporations stocks dwindle and the sole winner is the Japanese Yen as it surged to a 13 year high against the dollar on risk aversion and reassessment of risk and outlook, as carry trades lose all the appeal with falling stocks, commodities and now yields on majors especially if we take the Aussie and Kiwi as an example! Manufacturing and services readings form the euro zone today are to highlight continued contraction in the sector with falling demand and spending. While the most crucial in the European session today is to be the advanced third quarter GDP estimate from the United Kingdom which is to show the economy started to contract after flat output in the previous three months. It is expected with a contraction of 0.2% as the economic slowdown intensified in UK with curtailed consumer and business spending affected by both the tight liquidity and surging headline inflation. While the housing market added more negatively to the economy as it spread the lack of confidence into the economy. While looking at the sector that covers nearly 73% of growth, the services sector, its contractions weighed negatively with the destruction that halted the financial sector has a saying in the recession the UK is falling into for the first time since the recession of the early 1990s! Clearly as major economies falter the negative vibe is spreading and with their markets crippled emerging nations are incapable of picking the slack on their own as they deeply depend on exports! We saw china grow at the slowest pace in five years in the third quarter, and now South Korea reported the lowest in four years which drove their stock market indices down nearly 10%! Adding to that India is shifting to a Dovish stance to fight the aftermath of the worst credit crisis in the century. So here we are heading into the recession at a global scale and the prevention is quite late to such a crisis yet efforts from central bankers and governments are actually designed to limit the fallout and to prevent a severe and protracted recession in their nations and the world, especially considering the US efforts as they head to deliberate the second fiscal stimulus to revitalize the economy! Their efforts have spread from financial markets to Americans yet still the progress is in play. Bernanke has assured that the steps takes to stem the total collapse of the banking system will NOT prevent the severe economic downturn yet that does not mean they are not working at arms length to help unfreeze the gridlock in financial markets to reach at a point were banks do their part in helping the economy grow with supplying credit. Today the Treasury might be announcing the new round of measures taken as part of the $700 billion Emergency Economic Stabilization Act of 2008, as also know the Troubled Asset Relief Program (TARF), as they are expected to help regional US banks to cope with credit freeze as part of the announced $250 billion designed to recapitalize financial institutions as the first step was $125 billion for the nation's biggest nine banks. US officials are trying to contain the damage at base, as they aim at halting mounting foreclosures and falling home prices and sales, yet a clear sign of bottoming unfortunately has not been seen, especially with the new round of tightened credit markets! Though today we are waiting for existing home sales in September with a rise of 0.8% to an annualized 4.95 million units from 4.91 million yet that is to me merely a delayed count for rising sales in August according to what pending home sales showed, as September was a turmoil month and lenders tightened their available mortgage deals and Americans avoided the markets following the allowed bankruptcy of Lehman Brothers that led us to were we are today! This week was another to go on the records in the worst year for global financial markets and economies, as to me I am heading to call it the year that laid the corner stone to reformation of the capital market theory!!! Crown Forex disclaimer:The above may contain information for investors/traders and is not a recommendation to buy or sell currencies, gold, silver & energies, nor an offer to buy or sell currencies, gold, silver & energies. The information provided is obtained from sources deemed reliable but is not guaranteed as to accuracy or completeness. I am not liable for any losses or damages, monetary or otherwise that result. I recommend that anyone trading currencies, gold, silver & energies should do so with caution and consult with a broker before doing so. Prior performance may not be indicative of future performance. Currencies, gold, silver &energies presented should be considered speculative with a high degree of volatility and risk.

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