Oil, Copper Lead Gains in Commodities on Outlook for Rate Cuts

By Chanyaporn Chanjaroen

Oct. 29 (Bloomberg) -- Crude oil and copper led an advance in commodities in London and New York on expectations that lower borrowing costs will aid a rebound in demand for raw materials.

China, the world's largest consumer of industrial metals, cut interest rates for a third time in two months. The U.S., the biggest oil user, may lower its benchmark rate to 1 percent today, according to the median forecast of economists surveyed by Bloomberg. The S&P GSCI index of 24 commodities has dropped 29 percent this month, its worst performance since at least 1970.

``Commodities are pricing in a recovery in demand that will be sooner than people had earlier expected,'' said Eugen Weinberg, a commodities analyst at Commerzbank AG in Frankfurt. A decline in the dollar against currencies such as the euro and a rebound in global stock markets also buoyed commodities, he said.

The Federal Reserve has already cut the benchmark rate from 5.25 percent in the past 13 months and created six lending programs channeling more than $1 trillion into the financial system. The MSCI World Index of equities has plunged 42 percent since the start of the year.

Crude oil for December delivery climbed as much as $3.98, or 6.3 percent, to $66.71 a barrel on the New York Mercantile Exchange and was at $65.67 a barrel as of 11:51 a.m. in London. The fuel reached a record $147.27 on July 11.

``It's all moving on the back of the equity feel-good factor,'' said Robert Laughlin, a senior broker with MF Global Ltd. in London. ``The fundamentals of the oil market have gone for the moment.''

The Organization of Petroleum Exporting Countries will ``probably'' cut crude output quotas a second time to avoid the growth of inventories, Venezuelan Oil Minister Rafael Ramirez said in an interview on state television. The group reduced its output target by 1.5 million barrels a day after meeting Oct. 24.

Metals Advance

On the London Metal Exchange, industrial metals rallied. Copper for delivery in three months jumped $150, or 3.6 percent, to $4,280 a metric ton. Aluminum advanced 1.7 percent, nickel 5.3 percent and zinc 6.1 percent. The LME index of six metals has retreated for six consecutive weeks as copper and aluminum slumped to their lowest in three years.

A jump in stock prices is positive for copper ``the same way they've been negative'' as equities fell, said Kevin Tuohy, a trader at MF Global Ltd. in London. ``If you look at the chart, copper mirrors equities.''

Gold also advanced in London as the dollar weakened against the euro, buoying demand for the U.S. currency as an alternative investment. Silver and platinum gained.

``It's a buying opportunity for gold, the selling pressure on the dollar is high,'' said Liran Kapeluto, a senior dealer at trading-system operator Finotec Trading U.K. Ltd., said by phone from London.

Agriculture Strengthens

Corn and soybeans gained after the U.S. Department of Agriculture reduced its production forecast yesterday from an earlier prediction because of errors in acreage estimates.

Corn for December delivery rose as much as 17.25 cents, or 4.4 percent, to $4.08 a bushel in electronic trading in Chicago. Soybeans for January delivery gained as much as 31 cents, or 3.5 percent, to $9.19 a bushel.

To contact the reporter on this story: Chanyaporn Chanjaroen in London at cchanjaroen@bloomberg.net

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Suez Environnement Sales Rise 6.7% on Renewals

By Tara Patel and Ladka Bauerova

Oct. 29 (Bloomberg) -- Suez Environnement SA, Europe's second-biggest water company, boosted nine-month sales 6.7 percent as clients renewed water-supply and waste-management contracts.

Revenue climbed to 9.12 billion euros ($11.6 billion) from 8.55 billion euros a year earlier, the Paris-based company said today in an e-mailed statement. Earnings before interest, tax, depreciation and amortization rose 4.7 percent to 1.55 billion euros.

Clients signed up for repeat business in France and abroad in the period, helping Suez Environnement fend off competition from French utilities Veolia Environnement SA and Seche Environnement SA. Veolia, the world's biggest water company, warned last week that earnings would be hurt by a slowdown in European waste collection.

``We are undeniably heading for a recession, but waste and water treatment are little exposed to economic turbulence,'' Chief Executive Officer Jean-Louis Chaussade said during a conference call.

Suez Environnement rose as much as 1.59 euros, or 12 percent, to 14.44 euros in Paris and was trading up 11 percent at 14.29 euros at 12:37 p.m. local time.

The company maintained earnings and sales targets for this year. It forecasts Ebitda of 2.1 billion euros to 2.15 billion euros, compared with Ebitda last year of 2.06 billion euros.

Sales Growth

The utility's first-half revenue growth, excluding the effect of the sale of the Applus certification business sold in the fourth quarter of last year, was 6.7 percent, the utility said previously. The company expects average annual sales growth ``in excess of 5 percent'' and plans ``small'' acquisitions, it said.

Suez Environnement said last month that waste unit Sita France had acquired Boone Comenor Metalimpex, a French metal collector, to expand in recycling. No price was given for the transaction. Boone had sales of 258 million euros last year and operates in a dozen countries, building its facilities near car and household-appliance factories.

Sita also bought VPK Packaging Group NV's paper-recycling units, Doopa NV and Doopatrans NV, in the third quarter for an undisclosed sum to increase its presence in Belgium.

Suez Environnement, spun off from Suez SA and listed in July as part of its parent company's merger with Gaz de France SA, said that month it was acquiring 130 contracts and an equipment-sales company in the U.S. as it seeks to expand in that country.

To contact the reporter on this story: Tara Patel in Paris at tpatel2@bloomberg.net Ladka Bauerova in Paris at lbauerova@bloomberg.net.

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PetroChina Third-Quarter Profit Rises 30% on Price

By Wang Ying

Oct. 29 (Bloomberg) -- PetroChina Co., Asia's biggest oil producer, said third-quarter profit rose 30 percent, beating analysts' estimates, after crude oil prices surged to a record and output climbed.

Net income climbed to 39.9 billion yuan ($5.8 billion), or 0.22 yuan a share, in the three months to Sept. 30, from 30.7 billion yuan, or 0.17 yuan, a year earlier, PetroChina said in a statement to the Shanghai stock exchange today. Third-quarter sales gained 48 percent to 304 billion yuan.

Benchmark oil prices in New York were 57 percent higher in the third quarter from a year earlier and touched a record $147.27 a barrel on July 11. The world's second-biggest oil company after Exxon Mobil Corp. plans to increase refining capacity by 52 percent by 2010 and replace crude oil reserves it depletes at a ratio exceeding 100 percent.

``Expanded production has benefited the company,'' Grace Liu, an oil analyst with Guotai Junan Securities Co., said by phone from the southern city of Shenzhen. ``Higher domestic prices have also helped improve refining margins.''

China, the world's second-biggest oil user, raised gasoline and diesel prices by at least 17 percent in June, enabling refiners to pass on some of the higher crude costs to consumers.

Profit Increase

The Beijing-based company's third quarter profit is higher than the median estimate of 30.2 billion yuan in a Bloomberg survey of three analysts.

PetroChina shares rose 5.8 percent to HK$4.92 in Hong Kong today, before the results announcement. The stock has slumped 65 percent this year, compared with a 54 percent drop in the benchmark Hang Seng Index.

The oil producer boosted crude production by 2.8 percent to 653 million barrels in the first nine months and its oil- processing volume by 5.1 percent to 643 million barrels for the period, the company said.

PetroChina produced 55.6 million tons of gasoline, diesel and kerosene in the first three quarters, a 4.6 percent increase from a year earlier, it said. Its natural gas production gained 16 percent to 1.4 trillion cubic feet.

The parent company China National Petroleum Corp. will continue to buy shares in PetroChina in the 12 months starting Sept. 22, the Hong Kong and Shanghai-listed oil company said. China National last month purchased 60 million of PetroChina's Shanghai-listed shares as the government encourages buybacks to boost the country's stock market.

$80 a barrel

Chairman Jiang Jiemin said last week he wants to see oil prices at about $80 a barrel. The refining unit will make a profit in November, he said then.

PetroChina is studying the possibility of acquiring financially stressed resources companies, Jiang said last week.

Oil companies in China have resumed their quest for global resources after a two-year hiatus as the worst financial crisis since the Great Depression and falling commodity prices prompt a sell-off in share markets, making companies cheaper to acquire.

The Chinese oil producer lost its mantle as the world's most valuable oil company in the first half to Exxon after government fuel-price caps undermined its ability to pass on rising raw material costs. China controls fuel prices to limit their impact on inflation in the world's fastest-growing major economy.

To contact the reporter on this story: Wang Ying in Beijing at wang30@bloomberg.net.

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PetroChina Third-Quarter Profit Rises 30% on Price

By Wang Ying

Oct. 29 (Bloomberg) -- PetroChina Co., Asia's biggest oil producer, said third-quarter profit rose 30 percent, beating analysts' estimates, after crude oil prices surged to a record and output climbed.

Net income climbed to 39.9 billion yuan ($5.8 billion), or 0.22 yuan a share, in the three months to Sept. 30, from 30.7 billion yuan, or 0.17 yuan, a year earlier, PetroChina said in a statement to the Shanghai stock exchange today. Third-quarter sales gained 48 percent to 304 billion yuan.

Benchmark oil prices in New York were 57 percent higher in the third quarter from a year earlier and touched a record $147.27 a barrel on July 11. The world's second-biggest oil company after Exxon Mobil Corp. plans to increase refining capacity by 52 percent by 2010 and replace crude oil reserves it depletes at a ratio exceeding 100 percent.

``Expanded production has benefited the company,'' Grace Liu, an oil analyst with Guotai Junan Securities Co., said by phone from the southern city of Shenzhen. ``Higher domestic prices have also helped improve refining margins.''

China, the world's second-biggest oil user, raised gasoline and diesel prices by at least 17 percent in June, enabling refiners to pass on some of the higher crude costs to consumers.

Profit Increase

The Beijing-based company's third quarter profit is higher than the median estimate of 30.2 billion yuan in a Bloomberg survey of three analysts.

PetroChina shares rose 5.8 percent to HK$4.92 in Hong Kong today, before the results announcement. The stock has slumped 65 percent this year, compared with a 54 percent drop in the benchmark Hang Seng Index.

The oil producer boosted crude production by 2.8 percent to 653 million barrels in the first nine months and its oil- processing volume by 5.1 percent to 643 million barrels for the period, the company said.

PetroChina produced 55.6 million tons of gasoline, diesel and kerosene in the first three quarters, a 4.6 percent increase from a year earlier, it said. Its natural gas production gained 16 percent to 1.4 trillion cubic feet.

The parent company China National Petroleum Corp. will continue to buy shares in PetroChina in the 12 months starting Sept. 22, the Hong Kong and Shanghai-listed oil company said. China National last month purchased 60 million of PetroChina's Shanghai-listed shares as the government encourages buybacks to boost the country's stock market.

$80 a barrel

Chairman Jiang Jiemin said last week he wants to see oil prices at about $80 a barrel. The refining unit will make a profit in November, he said then.

PetroChina is studying the possibility of acquiring financially stressed resources companies, Jiang said last week.

Oil companies in China have resumed their quest for global resources after a two-year hiatus as the worst financial crisis since the Great Depression and falling commodity prices prompt a sell-off in share markets, making companies cheaper to acquire.

The Chinese oil producer lost its mantle as the world's most valuable oil company in the first half to Exxon after government fuel-price caps undermined its ability to pass on rising raw material costs. China controls fuel prices to limit their impact on inflation in the world's fastest-growing major economy.

To contact the reporter on this story: Wang Ying in Beijing at wang30@bloomberg.net.

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Suncor Cuts Forecast After Profit Misses Estimates

By Joe Carroll

Oct. 29 (Bloomberg) -- Suncor Energy Inc., the world's second-largest oil-sands producer, cut its production forecast by about 2 percent after equipment failures curbed third-quarter output and profit fell short of analysts' estimates.

The Calgary-based company reduced its 2008 oil-production target to 235,000 barrels a day from a June estimate of 240,000 to 250,000 barrels. Net income rose to C$815 million ($634 million), or 86 cents a share, from C$627 million, or 66 cents, Suncor said today in a statement. That's 25 cents below the average estimate of seven analysts surveyed by Bloomberg.

Suncor was unable to take full advantage of a 57 percent surge in crude prices during the July-to-September period because of unplanned shutdowns of plants that process and upgrade Alberta's oil-soaked sands, Chief Executive Officer Rick George said in the statement. The repairs are complete and the plants have resumed operations.

``With these issues behind us, we continue to target production of approximately 300,000 barrels per day by the end of the year as we work to realize the full value of our expanded oil sands production facilities,'' George said in the statement.

Last week, George slashed the company's 2009 capital budget by 33 percent and delayed work on the Voyageur project in Alberta, citing the 55 percent drop in oil prices from the record in July, and the collapse of world financial markets.

Suncor rose C$1.36, or 5.4 percent, to C$26.76 at 9:33 a.m. in trading on the Toronto Stock Exchange. Before today, the stock had declined 54 percent this year, on course for its worst annual performance in at least 14 years.

Oil-Sands Estimates

George, 58, has reduced his full-year 2008 estimate for oil-sands production three times because of mechanical failures and repairs. Operating costs topped C$50 a barrel during the second quarter, a 56 percent increase from a year earlier.

Suncor plans to spend C$6 billion next year, down from a September estimate of C$9 billion, and expects to maintain budgets of about C$6 billion a year through 2012, George said during an Oct. 23 conference call with investors. The company is spending an estimated C$7.5 billion this year.

Suncor's C$20.6 billion Voyageur plant that will process tar-like crude from northern Alberta into synthetic crude will open a year later than originally planned, George said last week. The company plans to focus instead on its Firebag project, which involves injecting steam into the ground to coax heavy crude to the surface.

Most of Suncor's operations extract oil-soaked sand from the ground with mechanical shovels and process the bitumen into synthetic oil for use by refiners making gasoline, diesel and other fuels.

Syncrude Canada Ltd., a joint venture led by Canadian Oil Sands Trust of Calgary, is the biggest oil-sands producer based on 2007 annual output.

To contact the reporter on this story: Joe Carroll in Chicago at jcarroll8@bloomberg.net.

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Sinopec Profit Falls 39% on Record Crude Oil Costs

By Winnie Zhu

Oct. 29 (Bloomberg) -- China Petroleum & Chemical Corp., Asia's biggest oil refiner, said third-quarter profit fell 39 percent because an increase in the government's ceiling on retail fuel prices wasn't enough to cover record crude costs.

Net income dropped to 8.17 billion yuan ($1.2 billion), or 0.087 yuan a share, from 13.4 billion yuan, or 0.155 yuan a share a year earlier, Sinopec, as the Beijing-based company is known, said in a statement to the Shanghai Stock Exchange today. That's higher than the median estimate of 5.2 billion yuan in a Bloomberg survey of three analysts.

China allowed fuel prices, controlled to curb inflation, to rise as much as 18 percent in June to help refiners cope with higher raw material costs. That increase fell short of the 57 percent jump in global oil prices in the quarter from a year earlier, prolonging Sinopec's losses from turning each barrel of crude in to gasoline and diesel.

``The June fuel price hike wasn't enough to boost profits at Chinese refineries,'' Qiu Xiaofeng, an oil analyst with China Merchants Securities Co., said by telephone in Shanghai before the announcement.

Sinopec shares rose 5 percent to HK$4.41 in Hong Kong today. The stock has fallen 67 percent this year, compared with a 59 percent drop in the benchmark Hang Seng Index.

State Subsidies

Sinopec received 11.7 billion yuan in state subsidies to compensate for losses from processing imported crude in the third quarter, it said. The government paid state refiners rebates of 75 percent on the 17 percent tax levied on crude imports in the second quarter. Sinopec received 22.93 billion yuan in that quarter, it said Aug. 24.

Sinopec's capital spending in the first nine-months was 58.8 billion yuan, the company said. The company will cut capital expenditure by 8.2 billion yuan because of operating pressures and cash-flow constraints caused by refining losses, it said Aug. 26.

Oil output between January and September increased 2 percent to 31.33 million metric tons and the average selling price rose 59 percent to 4,699 yuan a ton. Processing volume at Sinopec, which operates almost 29,000 gasoline filling stations, rose 7.3 percent to 128.77 million tons.

Natural gas output was 2.2 percent higher at 6.1 billion cubic meters as prices climbed 15 percent to 934.38 yuan a thousand cubic meter.

The third-quarter profit reported today is four times that of second quarter's net income of 2.19 billion. Sinopec's refining losses may narrow in the fourth quarter as crude prices fall, said Wang Aochao, an analyst at UOB Kay Hian Ltd.

Oil has dropped 56 percent from July's record because of concerns a global recession and the worst financial crisis since the Great Depression will cut demand. Crude oil for December delivery traded at $65.9 a barrel at 18:52 p.m. Singapore time.

To contact the reporters on this story: Winnie Zhu in Shanghai at wzhu4@bloomberg.net



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Hryvnia Plunges Most in 10 Years as Banks Buy Dollars for Debt

By Emma O'Brien

Oct. 29 (Bloomberg) -- Ukraine's hryvnia slid the most in 10 years against the dollar as political disunity damped optimism an International Monetary Fund loan will shore up the nation's finances and company demand for U.S. currency soared.

The currency tumbled more than 12 percent to an all-time low even as the Parliament in Kiev approved legislation paving the way for the $16.5 billion bailout from the IMF. Ukrainian banks and companies are selling hryvnia to pay as much as $1.5 billion of loans due by month-end, according to Dmitry Gourov, an economist at UniCredit SpA in Vienna.

``It's the end of the month and debt repayments need to be made so that's fueling the extra need for dollars,'' Gourov said. ``People are buying dollars at whatever rate they can get their hands on them.''

The hryvnia fell to an all-time low of 7.1250 per dollar as of 2:31 p.m. in Kiev, from 6.3500 yesterday, the biggest intraday decline since September 1998.

The hryvnia slumped 25 percent against the dollar this month as investors pulled cash from emerging markets on concern the global financial turmoil will make it more difficult for developing economies to pay foreign debt. Ukraine would default on its debt without the IMF loan, central bank Governor Volodymyr Stelmakh said today. The former Soviet republic's current-account deficit is $8.4 billion.

Lawmakers approved a bill today that will release the IMF loan after voting was postponed four times as backers of Prime Minister Yulia Timoshenko physically blocked sessions of Parliament because of opposition to separate legislation on the funding of snap elections. Ukraine will hold a general election in December after President Viktor Yushchenko's party withdrew from an alliance with Timoshenko's.

``The market is very concerned the IMF package is being held up,'' Ulrich Leuchtmann, head of emerging-markets currency strategy at Commerzbank AG in Frankfurt, said before the international loan was approved by Parliament. ``They don't seem to be in the right political state to deal with such things.''

To contact the reporter on this story: Emma O'Brien in Moscow at eobrien6@bloomberg.net

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Pound Heads for Biggest Two-Day Gain Against Dollar in 16 Years

By Lukanyo Mnyanda and Agnes Lovasz

Oct. 29 (Bloomberg) -- The pound headed for its biggest two-day advance against the dollar in more than 16 years as stocks rallied around the world and a report showed mortgage approvals rose for the first time since June 2007.

The pound was also poised for a second day of gains versus the euro after the Bank of England said lenders approved 1,000 more home loans last month than in August. The benchmark FTSE 100 Index of stocks climbed more than 4 percent as equities in Europe and Asia rose. Chancellor of the Exchequer Alistair Darling will pledge extra borrowing today to support the economy as it enters its first recession since 1992.

``With equities recovering, we're seeing a correction of the sharp weakness in the pound,'' said Marcus Hettinger, a Zurich-based currency strategist at Credit Suisse Group AG. ``A lot will depend on how risk appetite develops.''

The pound rose to $1.6071 as of 10:38 a.m. in London, from $1.5901 yesterday, bringing its gain in the past two days to 3.3 percent, the most since September 1992. The U.K. currency hasn't risen for two straight days since Oct. 14. Against the euro, the pound climbed to 79.68 pence, from 79.77 pence. It dropped 0.2 percent to 155.56 yen, after surging yesterday against the Japanese currency by the most in at least 37 years.

U.K. lenders approved 33,000 loans for house purchases last month, from 32,000 in August, still near the lowest since comparable data began in 1999, the Bank of England said today. The value of loans rose to 4.2 billion pounds, from 4.1 billion pounds. The number of approvals was expected to match the August figure, according to economists surveyed by Bloomberg.

Rate Cuts

Policy makers will probably cut their key interest rate half a percentage point to 4 percent at the next meeting on Nov. 6, according to the median estimate of 30 economists in a Bloomberg survey. The U.S. Federal Reserve will probably reduce its main rate by half a point to 1 percent today, according to a separate survey.

The Bank of England lowered the main rate by a half point this month to 4.5 percent in a joint action with central banks around the globe to stem the financial crisis.

The British currency had its biggest intraday decline versus the dollar in at least 37 years on Oct. 24, when a government report showed the economy contracted more than twice as much as economists predicted, probably marking the start of a recession. In the second quarter, there was no growth. Bank of England Deputy Governor John Gieve said in a speech yesterday that financial markets are under ``acute'' stress.

U.K. government bonds rose, with the yield on the two-year gilt falling 6 basis points to 3.06 percent. The 4.75 percent security due June 2010 gained 0.08, or 80 pence per 1,000-pound ($1,607) face amount, to 102.63. The yield on the 10-year note dropped 2 basis points to 4.37 percent. Bond yields move inversely to prices.

To contact the reporters on this story: Lukanyo Mnyanda in London at lmnyanda@bloomberg.net; Agnes Lovasz in London at alovasz@bloomberg.net;

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Canadian Dollar Gains as Commodities Including Oil Increase

By Michael J. Moore

Oct. 29 (Bloomberg) -- The Canadian dollar gained for a second day, its longest winning streak in more than a month, as its U.S. counterpart weakened versus most of the world's major currencies and commodities including oil and gold increased.

Canada's dollar has strengthened 3.2 percent since Sept. 24, after declining during four straight weeks. Crude oil accounts for 21 percent of the weighting in the Bank of Canada Commodity Price Index, the largest component.

``The sight of oil prices rebounding a bit is giving the Canadian dollar a little bit of attraction,'' said Shaun Osborne, chief currency strategist at TD Securities Inc. in Toronto. ``The U.S. dollar is also looking a little bit weaker overall, and we expect to see some volatility here over the next day or two.''

The Canadian dollar increased as much as 3 percent to C$1.2359 per U.S. dollar, from C$1.2732 yesterday. It gained for two days during Sept. 25-26. The currency traded at C$1.2375 at 10:11 a.m. in Toronto. One Canadian dollar buys 80.76 U.S. cents.

Crude oil for December delivery gained as much as $4.24, or 6.8 percent, to $66.97 a barrel. It reached a record $147.27 on July 11.

Gold increased $11.50, or 1.6 percent, to $750.80 an ounce. Natural gas rose 4.4 percent to $6.46 per million British thermal units.

The loonie, as Canada's currency is known because of the aquatic bird on the one-dollar coin, strengthened against 12 of the 16 most-actively traded currencies. It fell against three commodity-based currencies, dropping 1.2 percent against South Africa's rand, 1.3 percent versus New Zealand's dollar and 0.5 percent against Australia's dollar.

Canada's Stocks Gain

The MSCI World Index added 3 percent to 918.81. The Standard & Poor's/TSX Composite Index, Canada's main stock benchmark, rose 1.6 percent.

``Higher equity valuations across the globe are attracting better tolerance for risk,'' said Jack Spitz, managing director of foreign exchange at National Bank of Canada in Toronto. ``There are signs that the U.S. equity market may be bottoming out. Ultimately we'll see some better sessions for the Canadian dollar, if not now, then perhaps next week after the month end.''

Canada's dollar has fallen 15 percent in October. Spitz said the Canadian dollar will rebound to between C$1.15 and C$1.20 by the end of this year.

The 10-year note's yield rose 1 basis point, or 0.01 percentage point, to 3.70 percent. The price of the 4.25 percent security maturing in June 2018 fell 10 cents to C$104.40.

The yield on the two-year government bond dropped 2 basis points to 2.07 percent. The price of the 2.75 percent security due in December 2010 added 4 cents to C$101.39.

The 10-year bond yielded 163 basis points more than the two- year security, the widest spread since September 2004.

To contact the reporter on this story: Michael J. Moore in New York at Mmoore55@bloomberg.net.

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Mexican Peso Advances on Bets Fed Will Cut Key Lending Rate

By Valerie Rota

Oct. 29 (Bloomberg) -- Mexico's peso advanced for a second day on speculation the Federal Reserve will cut its key lending rate today to shore up growth in the world's largest economy.

Mexico's peso gained 0.8 percent to 12.9398 per U.S. dollar at 9:57 a.m. New York time, from 13.0405 yesterday. It touched 12.8694, its strongest in more than a week.

The Fed will cut its benchmark interest rate by half a percentage point to 1 percent today, according to the median forecast of economists surveyed by Bloomberg. The Fed is scheduled to announce its rate decision at about 2:15 p.m. in Washington.

To contact the reporter on this story: Valerie Rota in Mexico City at vrota1@bloomberg.net.

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Brazilian Real Trades Near Week High as Risk Aversion Decreases

By Adriana Brasileiro

Oct. 29 (Bloomberg) -- Brazil's real traded near the highest level in a week as gains in stocks in Europe and Asia reduced investor aversion to higher-yielding assets.

Rising commodity prices also fueled demand for reais as raw materials account for two-thirds of the country's exports.

The real traded at 2.1587 per U.S. dollar at 8:22 a.m. New York time, from 2.1610 yesterday. It touched 2.1385, the most since Oct. 21. Brazil's currency has gained 6.8 percent this week, dropped its decline from a nine-year high of 1.5545 per dollar on Aug. 1 to about 28 percent.

``The market still lacks parameters for trading, so any improvement abroad helps improve the mood of investors,'' said Francisco Carvalho, head of currency trading in Sao Paulo at Liquidez Corretora, the biggest currency derivatives brokerage in Brazil.

Yields on Brazil's local-currency bonds and rate futures contracts dropped on speculation the central bank will halt six months of interest-rate increases to prevent the economy from slowing amid the global credit crunch. Banco Central do Brasil will leave the benchmark rate unchanged at 13.75 percent at a meeting today, according to the median forecast of 46 economists surveyed by Bloomberg News. Fifteen economists expect the central bank to raise the rate for a fifth straight time since April.

The yield on Brazil's zero-coupon bond due in January 2010 fell 37 basis points to 15.57 percent, according to Banco Votorantim.

The yield on Brazil's overnight futures contract for January 2009 delivery dropped 4 basis points, or 0.04 percentage point, to 13.88 percent.

To contact the reporters on this story: Adriana Brasileiro in Rio de Janeiro at abrasileiro@bloomberg.net;

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Rubber Gains Second Day on Speculation Producers May Cut Output

By Aya Takada and Jae Hur

Oct. 29 (Bloomberg) -- Natural rubber gained for a second day on speculation major producers may cut production to bolster prices that have fallen to three-year lows and as a rally in stock markets eased concern an economic slump would curb demand.

Futures in Tokyo rose as much as 8.2 percent as officials from Thailand, Indonesia and Malaysia, the world's top producers, met in Bangkok to discuss how to boost prices. Rubber has plunged 51 percent from a 28-year high of 356.9 yen on June 30.

``There were two key factors in the market'' and the first was market speculation that the producers will cut output and the second was the rise in stock markets, Jun Nishimuta, an analyst at Kanetsu Asset Management Co. in Tokyo, said today by phone. The yen's weakness also supported prices, he said.

Rubber for April delivery added 5.4 percent to close at 173.9 yen a kilogram ($1,784 a metric ton) on the Tokyo Commodity Exchange after trading as high as 178.5 yen. Prices reached a three-year low of 154.6 yen yesterday.

Rubber, used for car tires, has dropped since June on concern the global lending crunch will push the world into recession, reducing demand for commodities. Thailand and Malaysia have proposed felling trees as a way to curb supply, while Indonesia has called on planters to reduce tapping.

``We are focusing on four measures -- cutting old rubber trees, stop adding new plantation, delaying tapping and asking exporters to stop quoting prices,'' Somchai Charnnarongkul, director-general of Thailand's farm ministry's Department of Agriculture, told reporters during a break at the meeting. ``There may be other short-term measures as well.''

Reduced Supplies

Malaysia, the world's third-biggest rubber producer, plans to reduce supplies by chopping down old trees, the government said yesterday.

Malaysia expects to remove as much as 38,000 tons a year from the market by accelerating its replanting program involving 32,000 hectares of existing rubber land, Minister of Plantation Industries and Commodities Peter Chin said in a statement.

Indonesia, the world's second-largest rubber exporter, will urge growers to reduce the frequency of tree tapping to curb production by as much as 30 percent, Agriculture Minister Anton Apriyantono said Oct. 16.

Asian stocks joined a global rally today and the yen booked its biggest decline since 1974 yesterday on speculation Japan will cut interest rates. A weaker yen supports futures as rubber trades globally in dollars.

January-delivery rubber on the Shanghai Futures Exchange, the most-active contract, closed down 20 yuan at 13,245 yuan ($1,936) a ton.

To contact the reporters on this story: Aya Takada in Tokyo atakada2@bloomberg.net; Jae Hur in Singapore at jhur1@bloomberg.net

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Japan's Yen Rises Against Dollar After Biggest Drop Since 1974

By Ye Xie and Lukanyo Mnyanda

Oct. 29 (Bloomberg) -- The yen rose against the dollar as some traders judged its biggest decline since 1974 yesterday was too much to sustain.

Japan's currency also gained versus the Brazilian real, which surged more than 10 percent against the yen yesterday. The dollar fell for a second day versus the euro as a drop in money- market rates reduced demand for the greenback as a haven. The Federal Reserve is forecast by economists to cut the target lending rate by a half-percentage point today.

``The market is looking for a 50-basis-point cut,'' said Matthew Strauss, a senior currency strategist at RBC Capital Markets Inc. in Toronto, a unit of Canada's biggest bank by assets. ``Anything other than that will disappoint the market.''

The yen rose 1 percent to 97.07 per dollar at 9:46 a.m. in New York, from 98.03 yesterday, when it fell 5.4 percent, its biggest decline in more than three decades. The yen traded at 123.67 versus the euro, compared with 124.32, after dropping 6.8 percent yesterday, the most since the 15-nation currency's 1999 debut. The dollar fell 0.8 percent to $1.2783 per euro.

Japan's currency plunged yesterday as a 10.8 percent rally in the Standard & Poor's 500 Index encouraged investors to resume carry trades, in which they get funds in countries with low interest rates and buy higher-yielding assets elsewhere. The yen also fell as speculation increased that the Bank of Japan will cut its target lending rate by a quarter-percentage point.

The yen rose 1.3 percent to 44.78 versus Brazil's real today after dropping 9.3 percent yesterday. Japan's target rate of 0.5 percent compares with Brazil's 13.75 percent.

Slump in Ukraine

Ukraine's hryvnia slumped more than 12 percent to 7.1250 against the dollar after Central Bank Governor Volodymyr Stelmakh said the nation will default on its debt without a $16.5 billion loan from the International Monetary Fund. The nation's parliament has yet to approve the proposed loan.

The pound rose 0.8 percent to $1.6034, bringing its gain in the past two days to 3.3 percent, the most since September 1992, as the U.K.'s main stock index rose more than 4 percent and the central bank said lenders increased mortgage approvals last month for the first time since June 2007.

The Fed will lower its 1.5 percent target lending rate by a half-percentage point at the conclusion of its two-day policy meeting today, according to the median forecast of 70 economists surveyed by Bloomberg News. Policy makers are scheduled to announce the decision at 2:15 p.m. in Washington. Futures on the Chicago Board of Trade show a 46 percent chance the central bank will cut rates by three-quarters of a point.

Fed Rate Cuts

The Fed has cut the benchmark rate from 5.25 percent in the past 13 months and created six lending programs channeling more than $1 trillion into the financial system to limit the severity of a recession.

The dollar touched $1.2330 per euro yesterday, the strongest since April 2006, on concern the seizure of short-term borrowing between banks may further slow global economic growth, encouraging investors to take refuge in the greenback.

In a sign bank lending started to thaw, the London interbank offered rate, or Libor, that banks charge each other for three-month loans in dollars dropped 0.05 percentage point to 3.42 percent, its 13th straight drop, according to the British Bankers' Association.

Japan's currency has jumped 32 percent versus the euro and 15 percent against the dollar on speculation the slumping global economy will encourage investors to sell higher-yielding assets and pay back low-cost loans in Japan.

Honda Cuts Forecast

The strength in the yen has eroded Japanese exporters' overseas income. Honda Motor Co., Japan's second-largest automaker, cut its operating profit forecast for the year ended in March 2009 by 13 percent to 550 billion yen ($5.6 billion).

The BOJ is ``leaning toward'' reducing its target rate by a quarter-percentage point to 0.25 percent when it announces a policy decision on Oct. 31, Nikkei reported yesterday without saying where it got the information.

The Group of Seven countries issued an unscheduled statement this week saying it was concerned ``about the recent excessive volatility'' in the yen. Japanese Finance Minister Shoichi Nakagawa said his country is ready to act in currency markets if necessary. Governments intervene in foreign exchange markets by arranging purchases and sales of currencies.

Volatility implied by dollar-yen options expiring in one month, a measure of expectations for future currency moves, was 33.40 percent today. It reached 41.79 percent on Oct. 24, the highest since Bloomberg began compiling data in December 1995.

``What has been driving the yen stronger is not speculative positions but the repatriation of Japanese investors and de- leveraging by global investors,'' said Sophia Drossos, a strategist at Morgan Stanley in New York. ``The trend is not over yet.''

To contact the reporters on this story: Ye Xie in New York at yxie6@bloomberg.net; Lukanyo Mnyanda in London at lmnyanda@bloomberg.net

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Copper Prices Jump to 1-Week High as Fed May Cut Interest Rates

By Millie Munshi

Oct. 29 (Bloomberg) -- Copper rose more than 7 percent to the highest price in a week on speculation the Federal Reserve will lower U.S. borrowing costs, reviving economic growth and demand for metals.

Interest-rate futures show a 100 percent chance the Fed will lower its benchmark interest rate by at least 0.5 percentage point to 1 percent at its policy meeting today. Copper had gained 10 percent in the previous two sessions on expectations a rallying stock market and lower borrowing costs would help ease the global economic slump.

``The perception that the Fed will ease rates today is providing a confidence boost'' and spurring price gains, said Frank McGhee, the head dealer at Integrated Brokerage Services in Chicago.

Copper futures for December delivery rose 14.4 cents, or 7.8 percent, to $2.0025 a pound at 9:10 a.m. on the Comex division of the New York Mercantile Exchange. Earlier, the metal touched $2.0125, the highest on a most-active contract since Oct. 22. The three days of gains would mark the longest rally in a month.

On the London Metal Exchange, copper for delivery in three months rose $283, or 6.9 percent, to $4,413 a metric ton ($2 a pound).

To contact the reporter on this story: Millie Munshi in New York at mmunshi@bloomberg.net.

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Gold Advances in London as Dollar Weakens Before Rate Decision

By Rachel Graham

Oct. 29 (Bloomberg) -- Gold rose for a second day in London as the dollar fell against the euro, buoying demand for the metal as an alternative to the U.S. currency. Silver gained.

The dollar fell for a second day on expectations the Federal Reserve will cut interest rates today. The relationship between gold and the euro-dollar exchange rate has strengthened this year, with a correlation of 0.58, compared with 0.52 a year earlier. A figure of 1 would mean the two moved in lockstep.

``It's a buying opportunity for gold,'' Liran Kapeluto, a senior dealer at trading-system operator Finotec Trading U.K. Ltd., said by phone from London. ``The selling pressure on the dollar is high.''

Gold for immediate delivery added $12.20, or 1.6 percent, to $759.15 an ounce by 1:05 p.m. in London. Futures for December added $18.40, or 2.5 percent, to $759.90 in electronic trading on the Comex division of the New York Mercantile Exchange.

Cuts in interest rates will also add to demand for gold as a hedge against inflation because some investors buy the commodity as a store of value when the buying power of money slides.

``If interest rates are low, money is very cheap and it's very easy to create an inflation bubble,'' Kapeluto said.

The Fed's benchmark rate may be cut by half a point to 1 percent, according to the median forecast of economists surveyed by Bloomberg News. The Fed has already cut the key borrowing cost from 5.25 percent in the past 13 months.

Among other metals for immediate delivery, silver rose 54.5 cents, or 5.9 percent, to $9.745 an ounce. Platinum added $11.75, or 1.5 percent, to $822.75 an ounce and palladium gained $8.50, or 4.7 percent, to $190.

To contact the reporter on this story: Rachel Graham in London at rgraham13@bloomberg.net

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Crude Oil Rises as Possible Rate Cut May Revive Fuel Demand

By Mark Shenk

Oct. 29 (Bloomberg) -- Crude oil rose for the first time in four days on signs that efforts to unlock global credit markets are beginning to work and central bank interest-rate cuts may help revive demand.

Oil advanced as much as 6.8 percent after European and Asian equity markets rallied. Prices also gained on forecasts that the U.S. Federal Reserve will cut rates today to help spur a recovery in the world's biggest fuel consuming country. China cut rates today and the European Central Bank may reduce them next week.

``The market is up on anticipation that there will be coordinating interest-rate cuts,'' said Nauman Barakat, senior vice president of global energy futures at Macquarie Futures USA Inc. in New York.

Crude oil for December delivery rose $4.01, or 6.4 percent, to $66.74 a barrel at 9:02 a.m. on the New York Mercantile Exchange. Futures touched $61.30 on Oct. 27, the lowest since May 9, 2007. Prices, which have tumbled 55 percent since reaching a record $147.27 on July 11, are down 29 percent from a year ago.

The Federal Reserve may lower its benchmark interest rate by half a point to 1 percent today, according to the median forecast of economists surveyed by Bloomberg News.

``Energy markets are moving on exogenous factors, such as equity and currency markets, not the energy fundamentals,'' Barakat said.

U.S. Inventories

The U.S. Energy Department will probably report that inventories of crude oil, gasoline and distillate fuel, a category that includes heating oil and diesel, rose last week, a Bloomberg News survey showed. The department is scheduled to release its weekly report today at 10:35 a.m. in Washington.

Crude oil supplies climbed 1.55 million barrels in the week ended Oct. 24 from 311.4 million the week before, according to the median of 12 analyst estimates before the report.

The Organization of Petroleum Exporting Countries will ``probably'' cut crude-output quotas a second time to avoid the growth of inventories, Venezuelan Oil Minister Rafael Ramirez said in an interview on state television.

OPEC reduced its production target by 1.5 million barrels a day after meeting Oct. 24. Ramirez said the group would analyze the reaction of the oil market between that cut and a planned Dec. 17 meeting.

Brent crude oil for December settlement increased $4.15, or 6.9 percent, to $64.67 a barrel on London's ICE Futures Europe exchange. Futures touched $59.02 on Oct. 27, the lowest since Feb. 22, 2007.

To contact the reporter on this story: Mark Shenk in New York at mshenk1@bloomberg.net.

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Central Europe Stocks Rally as Hungary Gets Bailout; Banks Soar

By Pawel Kozlowski

Oct. 29 (Bloomberg) -- Central European stocks rallied the most in a month, with benchmark indexes in Budapest and Prague climbing as much as 11 percent, after Hungary secured a 20 billion-euro ($25.5 billion) aid package to shore up its economy.

OTP Bank Nyrt., Hungary's biggest bank, surged 15 percent and Komercni Banka AS, the Czech unit of Societe Generale SA, rebounded from a five-year low. KGHM Polska Miedz SA, Poland's sole copper group, and OMV AG soared as commodity prices rallied.

The NTX Index of 30 companies in the region gained 77.63, or 9.4 percent, to 903.35 at 11:50 a.m. in Vienna, limiting this month's drop to 33 percent. Hungary's BUX Index soared 10 percent today, extending yesterday's 9.2 percent gain. The Czech PX Index advanced 9.6 percent as the Prague Stock Exchange resumed trading after a holiday yesterday.

Austria's ATX Index climbed 6.3 percent and Poland's WIG20 Index added 5 percent.

``This loan package was very good news and gave some relief to investors in the region,'' said Andras Pinter, who helps manage the equivalent of $1.5 billion at Budapest Alapkezelo in Budapest.

The International Monetary Fund will lend Hungary 12.5 billion euros, the European Union will provide 6.5 billion euros, and the World Bank will add 1 billion euros for the country, whose economy has been ravaged in the credit crisis.

Hungarian assets were battered as foreign-currency borrowing by local companies and consumers, along with slower growth, a wider budget deficit and higher government debt than elsewhere in east Europe, raised concern that the country may have difficulties in securing funding.

Banks Soar

OTP Bank rose 432 forint to 3,312 forint, trimming this month's drop to 46 percent. Komercni, the third-largest bank in the Czech Republic, gained 257 koruna, or 12 percent, to 2,450, climbing for the first time in five days. Raiffeisen International Bank Holding AG, the biggest foreign bank in Russia, added 1.65 euros, or 7.9 percent, to 22.65 in Vienna trading, snapping a three-day drop.

KGHM, the copper producer with the highest European mining output, rallied 3.3 zloty, or 13 percent, to 28.5, extending this week's gain to 33 percent as copper climbed for a third day.

OMV of Austria advanced 2.19 euros, or 10 percent, to 23.49, rising for a second day, while Mol Nyrt., Hungary's biggest oil company, jumped 1,410 forint, or 15 percent, to 10,840 as crude oil increased for the first time in four days.

To contact the reporter on this story: Pawel Kozlowski in Warsaw pkozlowski@bloomberg.net.

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Porsche Gains, Volkswagen Drops on VW Stock Supply

By Alexis Xydias

Oct. 29 (Bloomberg) -- Porsche SE climbed the most in at least 12 years on speculation the sports-car maker will profit from Volkswagen AG's fourfold increase as it takes steps to ease a so-called short squeeze. Volkswagen tumbled.

Porsche, which is Volkswagen's largest shareholder, jumped as much as 43 percent to 65.98 euros in Frankfurt, the steepest gain since at least January 1996. Volkswagen slumped as much as 48 percent to 491 euros.

The maker of the 911 sports car has options equivalent to 31.5 percent of Volkswagen's common stock, and said today that it may settle as much as 5 percent of the contracts to increase the supply of shares. The 5 percent stake increased in value by 10.8 billion euros ($13.8 billion) in this week's first two days of trading, data compiled by Bloomberg show.

``It's a huge gain for them,'' said Albrecht Denninghoff, a Frankfurt-based analyst at BHF-Bank AG. ``For Volkswagen, it will get easier for short-sellers than in the last two days. But getting to normal levels, that is something else.''

Volkswagen is the most shorted stock in Germany's benchmark DAX Index. Porsche's announcement Oct. 26 that it plans to raise its stake in the German carmaker to 75 percent forced short- sellers to cover their positions and triggered a short squeeze that at one point yesterday made Volkswagen the largest company in the world by market value, surpassing Exxon Mobil Corp.

`State of the Market'

``Porsche SE intends -- depending on the state of the market -- to settle hedging transactions in the amount of up to 5 percent of the Volkswagen ordinary shares,'' the company said in a statement to the stock exchange. ``This may result in an increase in the liquidity of the Volkswagen ordinary shares.''

Had Porsche acquired the options at Volkswagen's closing price last week, the sports-car maker would have gained more than 734 euros per share, before taxes, if the options were exercised at yesterday's closing price. A 5 percent stake in Wolfsburg, Germany-based Volkswagen's common stock equals 14.7 million shares, data compiled by Bloomberg show.

Volkswagen's common shares had lured short-sellers who speculated the stock's 35 percent rise in 2008 through the end of last week was overdone given the outlook for car sales. Some investors have called for regulators to investigate Porsche's transactions.

`Acted Irresponsibly'

``Porsche has acted irresponsibly and that has damaged capital markets considerably,'' Henning Gebhardt, who helps manage the equivalent of $220 billion at DWS Investment GmbH in Frankfurt, said yesterday. ``Porsche snuck up on Volkswagen. They knew about the short sellers, and it must have been clear to them that there would be a massive short squeeze.''

Hedge funds may face billions of dollars of losses because they wrongly expected Volkswagen shares to fall, the Wall Street Journal reported, citing unidentified prime brokers familiar with the positions.

Funds affected include Greenlight Capital Inc., SAC Capital Advisors LLC, Glenview Capital Management and Perry Capital LLC, the Journal said, citing unidentified people familiar with the funds.

Until Oct. 26, Porsche had said it was aiming only for a stake exceeding 50 percent, and Chief Executive Officer Wendelin Wiedeking said at the Paris Motor Show early this month that a stake of as much as 75 percent would be ``not realistic'' because of market turmoil.

`Remains Committed'

The Stuttgart, Germany-based carmaker said today it ``remains committed'' to increasing its stake in Europe's biggest carmaker to 75 percent and plans to continue to buy ordinary VW shares ``on and off'' the stock exchange at prices that are ``economically justifiable.'' The company has declined to give details on the options.

Deutsche Boerse AG, operator of the Frankfurt stock exchange, said late yesterday it will reduce Volkswagen's weighting in the benchmark DAX Index to 10 percent after the stock's surge. VW represented 27 percent of the DAX after yesterday's rally, an increase from 6.8 percent on Oct. 24.

The share surge meant Volkswagen was having an outsized effect on the DAX. While it was the only company out of 30 in the index that gained on Oct. 27, Volkswagen's 147 percent jump was enough to drive the measure up 0.9 percent.

Stoxx Ltd. also reduced the weight of Volkswagen in benchmarks including the Dow Jones Euro Stoxx 50 Index.

Germany's financial-markets regulator yesterday said it's looking into trading of Volkswagen shares. BaFin said it's monitoring Volkswagen and hasn't started a formal probe.

Porsche ``denies all responsibility for these market distortions and for the resulting risks to which the short sellers have exposed themselves,'' the company said. ``Allegations of price manipulation by Porsche'' are ``without any foundation whatsoever,'' the company said.

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

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U.K. Stocks Rally on Rate-Cut Speculation; Old Mutual Surges

By Sarah Jones

Oct. 29 (Bloomberg) -- U.K. stocks jumped, advancing for a second day, led by banks and commodity producers on speculation central banks will cut interest rates.

HBOS Plc, Britain's largest mortgage lender, and Standard Chartered Plc rallied more than 15 percent in London. Royal Dutch Shell Plc and BHP Billiton Ltd. advanced as crude oil and copper climbed. Old Mutual Plc surged 27 percent, leading a rebound in insurance stocks.

The FTSE 100 Index gained 199.8, or 5.1 percent, to 4,126.18 at 10:58 a.m. in London, as all but three stocks advanced, trimming its decline for the month to 16 percent. The FTSE All- Share Index added 4.7 percent, while Ireland's ISEQ Index increased 7.3 percent.

``Sentiment has turned around on hopes of rate cuts around the world,'' said Mark Outten, a London-based senior dealer at GFT Global Markets. ``The market has priced in a 50 basis points cut by the Federal Reserve tonight, but a chance of more is being talked about in the market.''

The U.S. Federal Open Market Committee today will probably cut its benchmark rate by half a percentage point to 1 percent, according the median forecast of economists surveyed by Bloomberg. China cut rates for the third time in two months to stimulate growth. The Nikkei newspaper reported the Bank of Japan will lower rates for the first time in seven years.

HBOS jumped 16 percent to 79.8 pence. Standard Chartered Plc, the U.K.'s third-largest bank, rose 15 percent to 807.5 pence. Royal Bank of Scotland, Britain's second-biggest bank before this year's decline of more than 80 percent, rallied 15 percent to 65.5 pence.

Old Mutual

Old Mutual led gains among insurers as the FTSE 350 Life Insurance Index climbed 10 percent, rebounding from five-days of declines.

The insurer and asset manager that makes most of its earnings in South Africa jumped 27 percent to 49.4 pence. Aviva, which yesterday said its capital reserves are ``very strong,'' surged 19 percent to 308 pence. Prudential Plc gained 8.9 percent to 270.25 pence.

The London-based Times today reported the U.K. Financial Services Authority has set up a team of external lawyers to deal with any crises, restructuring or failure within the insurance industry.

The FSA is also looking at ways to help insurers by easing rules on accounting and capital requirements, the Times said, citing people familiar with the matter.

Oil Stocks

Shell led energy companies higher as crude oil rose for the first time in four days, tracking gains in U.S. and Asian equities, to $64.46 a barrel. Europe's largest oil company increased 6.4 percent to 1,626 pence. BP, the region's second- biggest, advanced 5.3 percent to 485.75 pence.

BHP, the world's largest mining company, jumped 8.4 percent to 913 pence as copper rose for a third day. Rio Tinto Group, the world's third-biggest mining company, surged 7.7 percent to 2,432 pence. Anglo American Plc, the world's No. 2, added 14 percent to 1,300 pence.

The following stocks also gained or fell in the U.K. market. Stock symbols are in parentheses.

Aquarius Platinum Ltd. (AQP LN) jumped 9.5 pence, or 11 percent, to 97.5 as Deutsche Bank AG upgraded the shares to ``buy'' from ``hold.''

Ferrexpo Plc (FXPO LN) plunged 9.75 pence, or 18 percent, to 43.25 after the producer of iron ore in Ukraine abandoned expansion plans because of a ``significant'' cut in steel demand.

Chief Executive Officer Mike Oppenheimer and Dennis McShane, business development director, quit because of the decision and founder Kostyantin Zhevago will take over the business as CEO.

Hays Plc (HAS LN) climbed 7.5 pence, or 13 percent, to 64.5 after UBS AG upgraded the shares to ``neutral'' from ``sell.''

Managed Support Services Plc (MSS LN) soared 3.62 pence, or 57 percent, to 10 after the U.K. provider of kitchen and catering equipment to commercial and industrial markets said full-year results will exceed forecasts.

RPS Group Plc (RPS LN) gained 5.5 pence, or 3.9 percent, to 145 after Britain's only publicly traded environmental researcher saying full-year results will be in line with forecasts.

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

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BCE, Brookfield, Manulife, Nexen, Suncor: Canada Equity Preview

By John Kipphoff

Oct. 29 (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 7.2 percent to 9,151.63.

Insurance companies: Canada's financial-services regulator revised capital requirements for segregated funds run by insurance firms to provide relief as stocks plunge. Under the changes, the insurers will have more flexibility to set aside less money for longer-term obligations for segregated funds.

Sun Life Financial Inc. (SLF CN), Canada's third-largest insurance company, added 14 percent to C$30.06. Great-West Lifeco Inc. (GWO CN) gained 3.7 percent to C$26.30.

Manulife Financial Corp. (MFC CN), the country's biggest insurer, rose 11 percent to C$23.49. Separately, Manulife was raised today to ``outperform'' from ``neutral'' at Credit Suisse.

AbitibiBowater Inc. (ABH CN): North America's largest newsprint maker said that it intends to sell three parcels of timberland in Quebec as part of efforts to reduce debt. The shares rose 14 percent to C$1.87.

Agnico-Eagle Mines Ltd. (AEM CN): The owner of Canada's biggest gold deposit is scheduled to report third-quarter results. The Toronto-based miner may say that profit was 8 cents a share before one-time items, the average of 15 analyst estimates compiled by Bloomberg. The shares rose 11 percent to C$30.58.

BCE Inc. (BCE CN): The phone company going private in the biggest leveraged buyout in history reported a 36 percent drop in third-quarter profit to C$280 million ($222.4 million), or 30 cents a share, from C$440 million, because of costs to fire workers and get rid of property.

Excluding costs related to the acquisition and expenses to cut jobs, BCE reported profit of 60 cents a share, compared with analysts' 55-cent estimate in a Bloomberg survey. The shares gained 3.2 perc3ent to C$34.97, remaining below the C$42.75-s- share in cash agreed takeover offer by a Canadian pension plan.

Brookfield Properties Corp. (BPO CN): The owner of New York's World Financial Center said third-quarter net income rose to $174 million (C$219.5 million) from $3 million, after reporting a gain on the sale of its stake in Toronto's TD Canada Trust Tower. Funds from operations amounted to 38 cents a share, beating the average forecast of 37 cents by 16 analysts surveyed by Bloomberg. The shares gained 15 percent to C$11.50.

Nexen Inc. (NXY CN): The oil and natural-gas producer reported third-quarter profit more than doubled to C$886 million ($703.5 million), or C$1.66 per share, from C$403 million, beating forecasts on higher crude prices. Analysts in a Bloomberg survey estimated per-share profit of C$1.29. Chief Executive Officer Charlie Fischer will retire, the company said.

Separately, competitors Total SA and Royal Dutch are considering takeover bids for the company, after Nexen's shares dropped, the Financial Times reported, without saying where it got the information. The shares climbed 14 percent to C$16.25 and are down 49 percent in 2008.

QLT Inc. (QLT CN): West Coast Asset Management Inc., a U.S. investment firm, said it has amassed a stake of about 7.5 percent in the Vancouver-based drugmaker and may approach management about taking QLT private or merging it with another company. The shares dropped 9.4 percent to C$2.50.

Suncor Energy Inc. (SU CN): The world's second-largest oil- sands producer said third-quarter profit increased 30 percent to C$815 million, or 86 cents a share, from C$627 million, as crude prices surged to a record. Per-share earnings before one-time items were C$1.04, about 5.8 percent less than the average of 15 analysts' estimates in a Bloomberg survey, while sales of C$8.93 billion exceeded forecasts. Suncor rose 9.6 percent to C$25.40.

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

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European Stocks Climb as Credit Costs Ease; RBS, Daimler Rally

By Sarah Thompson

Oct. 29 (Bloomberg) -- European stocks gained for a second day as falling credit costs spurred a rally in financial shares, while higher commodity prices pushed up oil and metals producers.

Royal Bank of Scotland Group Plc, Allianz SE and Axa SA jumped more than 10 percent as money-market rates dropped in Europe, the U.S. and Asia. Daimler AG surged 19 percent after Merrill Lynch & Co. said the carmaker's shares were ``oversold'' following a 45 percent slump this month. Rio Tinto Group climbed 13 percent as copper advanced for a third day, while Royal Dutch Shell Plc rose 7.9 percent after oil gained more than $3 a barrel.

The drop in money-market rates ``shows that the system is beginning to unclog,'' said Charles Mackinnon, chief investment officer at London-based Thurleigh Investment, where he manages the equivalent of $256 million. ``That will eventually lead to less volatility in markets and that will bring us out of this slump.'' He spoke in a Bloomberg Television interview.

Europe's Dow Jones Stoxx 600 Index climbed 5.7 percent to 210.66 at 2:20 p.m. in London, with all 19 industries advancing except for automakers as Volkswagen AG tumbled 41 percent.

The market extended early gains after China cut rates for the third time in two months, while U.S. stocks gyrated ahead of the Federal Reserve's decision on interest rates today. Increased commercial paper sales helped send the Dow Jones Industrial Average to its second-best point gain yesterday.

More than $11 trillion has been erased from the market value of equities worldwide this month, accounting for about one-third of the total value wiped off stocks this year, as $681 billion of writedowns and losses by banks triggered a freeze in credit markets. The Stoxx 600 has retreated 18 percent in October.

Asia, Emerging Markets

The MSCI Asia Pacific Index increased 3.7 percent today as investors speculated Japan will cut rates. The MSCI Emerging Markets Index rose 3.3 percent, gaining for a second day, as Hungary received an International Monetary Fund-led $25.5 billion loan and governments in Russia and Kazakhstan bought shares in their nation's companies. Hungary's BUX Index jumped 13 percent, the most in 10 years. Russia's Micex Index rallied 11 percent.

Royal Bank of Scotland, the U.K.'s fourth-largest lender, climbed 13 percent to 64.1 pence. Allianz, Europe's biggest insurer, rallied 17 percent to 56.50 euros. Axa, the region's second-largest insurer, jumped 16 percent to 14.005 euros.

Efforts by governments and central banks worldwide to bail out banks and cut borrowing costs are showing signs the paralysis among lenders is easing. Hong Kong's three-month interbank offered rate, or Hibor, declined 30 basis points today, the most in a week, on prospects for rate cuts.

13th Straight Drop

The London interbank offered rate, or Libor, that banks charge each other for three-month loans in dollars fell 5 basis points to 3.42 percent, its 13th straight drop. The rate is down 140 basis points since Oct. 10. The comparable euro rate fell 2 basis points to 4.83 percent, the 15th consecutive decline, and losing lost 56 basis points since Oct. 8, BBA data showed.

In the U.S., sales of longer-term commercial paper soared 10- fold after the Federal Reserve began buying the corporate IOUs.

Futures on the Chicago Board of Trade show a 50 percent chance the central bank will trim its target for overnight bank loans to 0.75 percent from 1.5 percent. The odds increased from 46 percent yesterday. The rest of the bets are for a half-point reduction.

ECB Rate Outlook

European Central Bank President Jean-Claude Trichet said Oct. 27 the bank may cut rates next week as the financial crisis damps inflation.

``Europe is snapping back on the sharp rise in Wall Street last night from incredibly oversold levels and in anticipation of interest-rate cuts,'' said Nick Brind, a London-based money manager at New Star Asset Management, which oversees about $25 billion.

Rio Tinto Group, the third-biggest mining company, rose 13 percent to 2,556 pence. BHP Billiton Ltd., the world's largest, gained 13 percent to 950 pence.

Copper for delivery in three months climbed as much as 7.9 percent to $4,455 a metric ton, extending yesterday's 2.7 percent gain.

Shell, Europe's largest oil company, advanced 7.9 percent to 1,648 pence. Total SA, the region's third-biggest, added 9.6 percent to 41.29 euros.

Crude for December delivery climbed as much as $4.24, or 6.8 percent, to $66.97 a barrel in New York.

Daimler surged 19 percent to 23.005 euros after Merrill upgraded the stock ``buy'' from ``neutral.''

RSI Signal

``Any improvement in the macro outlook, debt market outlook, or even any progress on a further Chrysler disposal could lead to some bounce-back in Daimler shares,'' London-based analyst Harald Hendrikse wrote in a note to clients today. ``Daimler shares are discounting a lot.''

Daimler's relative strength index, a technical measure used by some analysts to predict moves, closed at 27.46 yesterday. A reader below 30 indicates the stock may rise, according to the analysts.

Volkswagen tumbled 41 percent to 554.69 euros after its biggest shareholder, Porsche SE, said it will take steps to increase the supply of stock after a so-called short-squeeze spurred a fourfold rally in the past two days.

Porsche, which said Oct. 26 it has options equivalent to 31.5 percent of Volkswagen's common stock ``to hedge against price risks,'' may settle as much as 5 percent of those options, it said in a statement today.

``Porsche SE intends -- depending on the state of the market -- to settle hedging transactions in the amount of up to 5 percent of the Volkswagen ordinary shares,'' the carmaker said in a statement to the German stock exchange today. ``This may result in an increase in the liquidity of the Volkswagen ordinary shares,'' said Porsche, the maker of 911 sports cars.

Porsche soared 21 percent to 58.14 euros.

Deutsche Boerse AG, operator of the Frankfurt stock exchange, said late yesterday it will reduce Volkswagen's weighting in the benchmark DAX index to 10 percent after the stock's surge.

Bayer AG surged 11 percent to 42.71 euros. Germany's largest drugmaker confirmed its sales and earnings forecast for the year, even as profit missed analysts' estimates.

To contact the reporters for this story: Sarah Thompson in London at sthompson17@bloomberg.net;

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