Tuesday, November 11, 2008

German Investor Confidence Rose as Policymakers Step Up Efforts

Daily Forex Fundamentals | Written by DailyFX | Nov 11 08 10:31 GMT |

The German November ZEW rose to -53.5, better than our median of -63 and up from -63 in October. The massive rate cuts over the past month and the announcement of stimulus programmes are likely to have helped to stabilize confidence, but readings remain at very low levels with pessimists clearly outnumbering optimists. This is consistent with expectations for ongoing weak growth going into next year and should keep the ECB on course for further monetary easing in December.

Meanwhile, Euro-Dollar (EURUSD) was under pressure in to the release after a good Eastern European buy order was already filled and led to a pullback from 1.2799 session highs to 1.2745. EUR-USD popped up to 1.2770-75 immediately after the ZEW release, but a combination of weak Euro-Zone economic fundamentals and negative European equity markets encouraged euro selling on strength. A move back in to the 1.2700 may be seen as the session progresses, although ongoing speculation of a USD 5 bln sell order on behalf of an Eastern European name is tempering EUR-USD's downside.

DailyFX

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Australian PM faces censure over Bush "G20" call

Australia's Prime Minister Kevin Rudd speaks at a media announcement in Melbourne November 10, 2008.
REUTERS/Mick Tsikas

By Rob Taylor

CANBERRA (Reuters) - Australian Prime Minister Kevin Rudd faced censure on Tuesday over accusations he was behind news reports about a phone call with U.S. President George W. Bush in which Bush appeared unaware of the G20 group of rich nations.

Just days before traveling to Washington for a financial crisis summit called by Bush, Rudd used his parliamentary dominance to defeat rival accusations he or a senior adviser had painted the outgoing U.S. leader as a "fool."

"The prime minister's fingerprints are all over this. Every letter, every paragraph, is dripping with his DNA," conservative opposition leader Malcolm Turnbull told lawmakers.

The White House has rejected accounts of a private phone call last month between Rudd and Bush, carried in The Australian newspaper.

Rudd has also denied Bush made the comments but the row could damage his center-left government's relations with Washington, Australia's closest and most important ally.

In the newspaper article, Bush is said to have asked Rudd: "What's the G20?," referring to the group of rich and emerging nations including China and Brazil.

Bush has called the group together for a meeting on the global financial crisis in Washington this week.

The U.S. ambassador to Australia and U.S. officials in Washington denied Bush had asked the question, as well as Australian accounts that Rudd was influential in Bush's decision to call a G20 crisis gathering rather than a smaller group of rich nations.

Rudd faced two days of questioning in parliament and refused repeatedly to deny that he or his staff had leaked the content of the telephone conversation, which reportedly occurred on a night when Rudd was having dinner with The Australian's editor.

Turnbull said the apparent indiscretion by Rudd or a top aide meant Australia would be viewed with distrust by other leaders at the upcoming financial crisis summit with Bush.

"(It was) an account so self-serving that it presented him as a diplomatic encyclopedia, a font of all knowledge, and the President of the United States, the chief executive of our greatest ally, as a fool," Turnbull said.

Rudd has also refused to agree to a police probe into the security breach.

Rudd, a Mandarin-speaking former diplomat with close China ties, has enjoyed record approval since his election a year ago, and has used his international experience to underpin his government's handling of the global financial upheaval.

A closely watched Newspoll in The Australian on Tuesday said the bookish leader's approval rating was at a near-record 65 percent.

(Editing by Paul Tait)

Read more...

Economy fears dog Asia stocks

By Eric Burroughs

HONG KONG (Reuters) - Asian stock markets and oil prices retreated on Tuesday while the yen pushed higher as a souring economic outlook cooled investor hopes sparked by China's massive stimulus plan.

Stocks pulled back after shares of General Motors (GM.N: Quote, Profile, Research, Stock Buzz) sank to a 62-year low and brokerages forecast that Goldman Sachs (GS.N: Quote, Profile, Research, Stock Buzz) will post its first-ever quarterly loss, stirring worries about the earnings damage to come as the global economy faces a recession.

The bankruptcy of No. 2 U.S. electronics retailer Circuit City CCTYQ.PK also cast a shadow over equities.

European shares were set to drop about 1.5 percent, according to financial bookmakers.

China's nearly $600 billion package, along with expectations U.S. President-elect Barack Obama will push for more fiscal spending to revive the economy, spurred investor risk-taking on Monday.

"We're still getting pretty weak economic data, and I don't think that's going to change anytime soon," said Sean Darby, chief Asia strategist at Nomura in Hong Kong.

Darby said that investor conviction remains low and many market players were not seeing strong reasons to pick up battered shares yet.

The MSCI Asia ex-Japan .MIAPJ0000PUS fell 3 percent but is still up about 24 percent from the low struck in October when investors dumped assets across the board to raise cash, hitting higher-yielding currencies and commodities as well.

GLOOMY DATA

Tuesday offered more gloomy economic data, with confidence among Japanese service sector workers hitting a record low in October and South Korean exports sliding 26 percent during the first part of November from a year earlier.

Japan's Nikkei average .N225 shed 3 percent to 8,809.30 after having jumped nearly 6 percent the previous day. Automakers and exporters led the decline.

The Shanghai Composite Index .SSEC and Hong Kong's Hang Seng .HSI held up better than other markets, losing 0.6 percent.

Construction and infrastructure-related companies climbed for a second day on hopes that China's big spending targetting infrastructure would provide a boon of new orders.

In commodities, U.S. crude oil prices were down $1.87 a barrel to $60.54 on worries about global demand, falling back near a 1-1/2-year low struck last week.

The yen edged up slightly, gaining as market players cut positions favoring higher-yielding currencies that tend to perform better when stocks rise and investor appetite for risk improves.

The dollar dipped 0.2 percent from late U.S. trade to 97.85 yen, while the euro was down 0.4 percent at 124.50 yen. The euro slipped 0.2 percent to $1.2730.

Dollar money market trading was quiet due to U.S. bond markets being closed for the Veterans Day holiday, though stock markets will be open as usual.

Three-month dollar rates in Singapore dipped to 2.2 percent to 2.75 percent from 2.3 percent to 3.0 percent.

With year-end approaching, market players said they were bracing for more hedge fund selling to raise cash holdings and prepare for investor redemptions.

The sharp sell-off across financial markets in October was driven in part by funds selling assets to boost cash holdings, especially with money markets remaining under such severe stress.

Highlighting the cross-asset liquidation in October, data on Tuesday showed foreign investors dumped a record 2.7 trillion yen ($27.6 billion) of Japanese bonds in addition to 1.32 trillion yen ($13.5 billion) of stocks last month.

"We are in a period in which foreign investors, including hedge funds, prepare for their year-end and raise their cash holdings," said Minoru Shioiri, chief manager of forex trading at Mitsubishi UFJ Securities in Tokyo.

"The yen could rise further if there are more funds rushing to liquidate positions, but the peak may have passed for now."

Japanese government bonds jumped on the drop in stocks and a solid auction of five-year notes.

JGB futures jumped 0.89 point to 138.09, while the gains pushed the benchmark 10-year Japanese government bond yield down 4 basis points to 1.485 percent.

HK shares slide 4.8 pct as recession woes deepen

* HK shares fall on worries over global economy * HSBC slides on bad loan concerns * Local developers drop on bleak outlook

(Updates to close)

By Jun Ebias

HONG KONG, Nov 11 (Reuters) - Hong Kong shares slid 4.8 percent on Tuesday, weighed down by banks on concerns the global economic downturn will increase bad loans, while local developers dropped as the outlook for the property sector dimmed.

Hong Kong developers Cheung Kong (Holdings) (0001.HK: Quote, Profile, Research, Stock Buzz), controlled by billionaire Li Ka shing, plunged 9.2 percent, while Sun Hung Kai Properties (0016.HK: Quote, Profile, Research, Stock Buzz) shed 5 percent.

"The market is pricing in the likelihood of a continued drop in property prices. The potential rise in the unemployment rate will depress demand further," said D. Gorton, analyst at Louis Capital Markets (Hong Kong).

Hong Kong's home prices are expected to fall 15 percent in 2009, while rents may decline 10 percent, Nomura International (HK) said in a research report on Tuesday.

HSBC (HSBA.L: Quote, Profile, Research, Stock Buzz)(0005.HK: Quote, Profile, Research, Stock Buzz) shed 4.7 percent to HK$88 after it said on Monday that it took a $4.3 billion hit for bad debts in the United States, up $700 million from the previous quarter. [ID:nLA296008]

JP Morgan cut HSBC's price target 25 percent to HK$82.

"The results of HSBC were discouraging. The big worry is that its U.S. operations will continue to deteriorate and they will have to set aside more funds to cover bad loans in the future," said Y.K. Lee, an analyst at Core-Pacific Yamaichi.

Shares of Semiconductor Manufacturing International Corp (SMIC) (SMI.N: Quote, Profile, Research, Stock Buzz)(0981.HK: Quote, Profile, Research, Stock Buzz), China's top contract chip maker, soared 29 percent. The stock earlier rose as much as 61 percent in its biggest one-percentage gain ever after it said it planned to sell a $172 million stake to Beijing-based Datang Telecom Technology & Industry Holdings Co Ltd. [ID:nHKG152167]

The benchmark Hang Seng Index .HSI closed down 703.73 points at 14,040.90, snapping a two-day 7 percent rally.

A total of HK$54.4 billion ($7 billion) changed hands, down from HK$60.7 billion on Monday.

Standard Chartered Bank (2888.HK: Quote, Profile, Research, Stock Buzz) fell 6.5 percent after it said on Monday its local subsidiary in Brazil had agreed to acquire some fixed assets from Lehman Brothers Brazil. [ID:nWLB3205]

The China Enterprise Index .HSCE of top locally listed mainland Chinese companies fell 3.7 percent to 7,136.92, led by a 5.8 percent slide in the nation's top insurer, China Life Insurance (2628.HK: Quote, Profile, Research, Stock Buzz).

Chinese banks and construction-related stocks gave up earlier gains as investors were sceptical about their earnings prospects with the slowing mainland economy.

Top lender ICBC (1398.HK: Quote, Profile, Research, Stock Buzz) lost 2.3 percent, while smaller rival China Construction Bank (0939.HK: Quote, Profile, Research, Stock Buzz) fell 3.7 percent.

The world's No. 3 alumina producer Chalco 2600.HK) fell 2.6 percent, while cement maker Anhui Conch <0914.hk>

Shares of Lenovo (0992.HK: Quote, Profile, Research, Stock Buzz), the world's No. 4 PC maker, fell 7.8 percent after Credit Suisse cut its earnings forecast for the company by 58 percent and 48 percent for 2009 and 2010, respectively, due mainly to slow corporate demand. The stock hit a nine-year low on Monday after Morgan Stanely downgraded the company. [ID:nLA296008]

Hong Kong-based consumer goods exporter Li & Fung (0494.HK: Quote, Profile, Research, Stock Buzz) slid 12.5 percent after it said at the weekend it had imposed a hiring freeze and would lay off some employees, among other cost-cutting measures.

Shanghai Electric Group (2727.HK: Quote, Profile, Research, Stock Buzz) rose 9.4 percent. The company said late on Monday it had received official approval from regulators for its planned A share sale and merger proposal.

(Editing by Anne Marie Roantree)

SNAPSHOT - Financial Crisis - 0900 GMT

NEWS

- China Oct trade surplus hits record $35.24 billion, beats expectations, import growth shows sharp fall

- Asian holdings of foreign exchange reserves shrink $119 billion, excluding China, as authorities defend currencies

- China inflation falls to 17-month low of 4 pct, further evidence of slowing growth

- British retail sales fall for fifth month in Oct, business confidence in Australia at record lows.

- HKMA injects around US$300 million into HK banking system, Macau announces stimulus measures

- Fannie Mae says may have to tap government for cash to avoid shutting down after reporting record $29 billion loss

MARKETS

- European shares drop in early trade, track Wall St losses

- Asian stocks fall on souring economic outlook, Nikkei slides 3 percent with exporters' tumble, Seoul shares slip

- Yen pushes higher, market braces for hedge-fund selling to raise cash holdings, prepares for investor redemptions.

- Oil tumbles more than 2 percent to $61 a barrel on global recession worries. Gold little changed

QUOTES

"Export growth was still pretty fast in October due to seasonal factors. However, growth will slow in the next two months, especially in December. I think import growth will also continue to slow down in the next two months and next year as well because Chinese processing firms have been getting fewer orders, as was reported at the latest canton fair." - Zhao Qingming, China Construction Bank. on China trade data. "It appears that the continuing volatility in global equity markets, emergency financial packages, falling commodity prices, and talk of global recession have finally broken business optimism and now fear reigns supreme." - Alan Oster, group chief economist, NAB.

EVENTS

Tuesday, Nov 11

SAO PAOLO - Central bank heads from leading industrial and emerging economies meet at the Bank of International Settlements

ECB's Yves Mersch speaks at conference in Luxembourg

U.K. September trade data

Australia consumer confidence for November

U.K. BRC retail sales monitor for October

German wholesale prices for October

French revised Q3 non-farm payrolls

U.S. Veterans Day holiday -- bond markets, government offices closed

Redbook weekly U.S. retail sales

(Compiled by World Desk, Asia +65 6870 3815)

Nikkei sheds 3 pct on grim U.S. corporate outlook

*Nikkei slides 3 percent in light, volatile trade

*GM, Goldman and Circuit City news weigh on exporters

*Mitsubishi Rayon tumbles 10 percent on Lucite deal (Adds stocks, details)

By Aiko Hayashi

TOKYO, Nov 11 (Reuters) - The Nikkei average slid 3 percent on Tuesday, as exporters like camera maker Canon (7751.T: Quote, Profile, Research, Stock Buzz) tumbled after a batch of grim news about U.S. corporate giants fuelled fears of a protracted global recession.

Chemicals firm Mitsubishi Rayon Co (3404.T: Quote, Profile, Research, Stock Buzz) slid 10 percent after saying it was looking at acquiring unlisted British chemicals producer Lucite International, a deal it confirmed after the close. [ID:nT46372]

But JFE Steel Corp (5411.T: Quote, Profile, Research, Stock Buzz), the world's third-biggest steelmaker, outperformed rivals after it said it may cancel or suspend two projects to build steel mills in Brazil and Vietnam. [ID:nTKF003140]

Trade was volatile, with the benchmark paring early losses to be almost flat at one stage, helped by a softening yen and gains in the U.S. stock futures SPc1, which later reversed course.

"We're seeing a tug of war between negative news coming out of manufacturers such as GM and the financial crisis taking a breather, with investors waiting for steps to be unveiled by President-elect Barack Obama," said Takahiko Murai, general manager of equities at Nozomi Securities.

Corporate news out of the United States was bleak.

Deutsche Bank lowered its equity value on General Motors (GM.N: Quote, Profile, Research, Stock Buzz) to zero, sending its shares to 62-year lows, and analysts warned that Goldman Sachs (GS.N: Quote, Profile, Research, Stock Buzz) could post a quarterly loss for the first time in its history. [.N]

The bankruptcy filing by Circuit City Stores Inc (CC.N: Quote, Profile, Research, Stock Buzz), the No. 2 U.S. consumer electronics retailer, also underlined growing U.S. consumer spending cutbacks.

In light trade, the benchmark Nikkei .N225 ended down 272.13 points at 8,809.30, after falling more than 4 percent earlier. The broader Topix .TOPX declined 3 percent to 889.36.

Some market players said investors were already growing nervous about the global financial summit of Group of 20 leaders in Washington on Friday and Saturday.

"There's talk that it will be extremely difficult to bring the different groups together to agree about anything, and this is scaring off investors," said Tomomi Yamashita, a fund manager at Shinkin Asset Management.

But some also said that the stock market had also found some support from a New York Times report that Obama asked President George W. Bush on Monday to back immediate emergency aid for the U.S. auto industry. [ID:nN10476130]

EXPORTERS HIT

Against the yen, the dollar was unchanged at 98.02 yen after retreating to 97.49 yen.

Canon slid 8.4 percent to 3,150 yen, becoming the largest drag on the Nikkei 225, while Advantest Corp (6857.T: Quote, Profile, Research, Stock Buzz), the world's No.1 maker of chip testers, lost 4.6 percent to 1,315 yen.

Toyota Motor (7203.T: Quote, Profile, Research, Stock Buzz) shed 4.9 percent to 3,300 yen and Honda Motor (7267.T: Quote, Profile, Research, Stock Buzz) declined 5.3 percent to 2,240 yen.

Mitsubishi Rayon tumbled 10.2 percent to 220 yen.

"The deal is short-term negative but mid- and long-term positive for the company," said Credit Suisse analyst Masami Sawato before the official announcement.

JFE Holdings ended 2.4 percent lower at 2,620 yen but outperformed a 5.6 percent slide for rival Nippon Steel Corp (5401.T: Quote, Profile, Research, Stock Buzz) after it said it may cancel or suspend two plans for mills in Brazil and Vietnam, worth $5-6 billion each, if demand remains weak.

Citizen Holdings Co (7762.T: Quote, Profile, Research, Stock Buzz) tumbled 9.5 percent to 504 yen after the watch maker slashed its annual operating profit forecast by 27 percent due to slumping consumer spending and slowing corporate investment in industrial machinery.

Among shares that rose, Shionogi (4507.T: Quote, Profile, Research, Stock Buzz) extended gains to 2,105 yen, making for a 13.6 percent advance over two days after AstraZeneca (AZN.L: Quote, Profile, Research, Stock Buzz) outflanked rivals with impressive clinical trial results for its cholesterol drug Crestor.

The Japanese drugmaker originally discovered Crestor and receives royalties on sales. [ID:nLA371115]

Some 2.1 billion shares changed hands on the Tokyo Stock Exchange's first section, compared with last week's daily average of 2.6 billion.

Declining stocks outnumbered advancing ones by more than 3 to 1. (Reporting by Aiko Hayashi; Editing by Edwina Gibbs)

Europe shares fall in early trade, commodities lead

FRANKFURT, Nov 11 (Reuters) - European shares dropped in early trade on Tuesday, tracking losses on Wall Street and in Asia, as fear of a widespread recession eclipsed optimism over China's $600 billion stimulus package.

At 0815 GMT the FTSEurofirst 300 index of top European shares was down 1.5 percent at 908.48 points. The index rose 0.9 percent in the previous session, as news of China's stimulus plan sparked a rally in commodity-related shares.

But commodity stocks pulled back on Tuesday as fears for the global economy returned to the fore and metals and oil prices CLc1 retreated.

BG Group (BG.L: Quote, Profile, Research, Stock Buzz), BP (BP.L: Quote, Profile, Research, Stock Buzz), Total (TOTF.PA: Quote, Profile, Research, Stock Buzz) and ENI (ENI.MI: Quote, Profile, Research, Stock Buzz) were down 1.9-3.9 percent.

Miners fell, with Anglo American (AAL.L: Quote, Profile, Research, Stock Buzz), BHP Billiton (BLT.L: Quote, Profile, Research, Stock Buzz), Rio Tinto (RIO.L: Quote, Profile, Research, Stock Buzz) and Xstrata (XTA.L: Quote, Profile, Research, Stock Buzz) 3.9-5.9 percent lower.

Data showed on Tuesday that China's inflation fell to a 17-month low of 4 percent in October, while trade figures were expected to show slowing imports, dampening hopes that China's growth will help cushion the impact of a global downturn.

Adding to the gloom in Europe, data showed British retail sales fell for a fifth straight month in October on a like-for-like basis, and by the biggest amount in more than three years.

Banks took the most points off the index. Deutsche Bank (DBKGn.DE: Quote, Profile, Research, Stock Buzz) slid 5 percent, Banco Santander (SAN.MC: Quote, Profile, Research, Stock Buzz) fell 4.3 percent and Credit Agricole (CAGR.PA: Quote, Profile, Research, Stock Buzz) was down 2 percent. Across Europe, the FTSE 100 index was down 1.5 percent, Germany's DAX was 2.2 percent lower and France's CAC 40 was down 2 percent.

(Reporting by Sarah Marsh)

Major Market Movers: Inescapable Global

Daily Forex Fundamentals | Written by Crown Forex | Nov 11 08 08:02 GMT |

Since the beginning of the Crisis all the eyes were headed toward the United States as it was the source to all this destruction in financial markets; but now investors', citizens or any interested watcher are taking a wider outlook witnessing the fall down in some of the world's economy that used to bolster the overall global growth.

China is now teetering on the brink of a recession, even when the Chinese government came out in the past two days giving out a plan that would prosper the economy once again, yet there is a huge possibility that the proposed plan came late as a temporary recession will defiantly be seen in the world leading producer .

The retreating expansion in the Chinese output levels drove Consumer prices down south, according to the released data prices plunged to 4.0 percent in October to a 17 months low from the previous 4.6%, as this fall came at the month the Credit Crisis intensified. This ease in consumer prices would open the path for the Chinese Central Bank to consider slashing rates down in an attempt to support the economy from shedding more losses.

The apparent slow down along with the lack of Confidence in the stocks markets had resulted in a massive down turn to the stock prices, and the weakening outlook had obligated the Asian stocks to head down south, the CSI 300 Index fell 1.20% in the Asian session leaving the index with a total 66.65% fall since the beginning of the year, also the Japanese Nikkei Index fell a total of 3.00% in the early session affected by the ongoing fears from a global recession along with the gloomy outlook of the final quarter earnings.

Also on the queue is Australia; according to the released statistic, the national Australian Bank announced the Business Confidence fell to -29 levels in October the lowest in history from the previous -8 in the previous month, also the bank said the business conditions fell to -11 in October from the previous -1. The deterioration in the confidence levels along the tumbling financial sector and the slowing demand on the commodities is putting Australia on the verge of a recession, which would by the first in two decades.

The world's outlook continues to gloom; expectations of more downturns are becoming highly anticipated, but who's next this is the question?? Majors companies in the world collapsed, the fear is now to see economies collapsing as most central banks in the world are running out of instruments that could be used in salvaging their economies. The British Prime Minister came out yesterday to say taxes must be reduced along with using more spending policies which would prop the spending levels in the world, the noted added clarifies that taxes might be eased in the Royal territory in order to pick up their economy from a potential recession.

Markets continue to have empty calendars from the United States as this week is considered to be a light weak for the Americans, but this did not stop the feds yesterday from intervening to help the AIG, were the decided to buy a $40 billion of their shares along to narrowing their loan from $85 billion to $60 billions saying that this company is considered to be the largest insurer in the world.

The intervention retrieved some confidence back in the US session, indices managed to narrow down their losses, the Dow Jones industrial average fell 0.82% closing at 8870.54 levels and the S&P 50 fell 1.27% closing at 919.21 levels and NASDAQ lost 1.86% closing at 1616.74 levels.

The outlook remains the same; the US dollar might continue to weaken against majors as the situation is getting darker, yet the destruction is halting upon the other economies so we have to see who will be the first survivor from all this mess.

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.

Wakeup Call: Equities Lower On Concern That The Economy Is Contracting Further

Daily Forex Fundamentals | Written by Saxo Bank | Nov 11 08 07:57 GMT |

Last weeks US unemployment data does have an effect afterall. Equities will trade lower at the opening due to fear of further contraction of the economy and the disappointing earnings from Vodafone.

Calendar

Economic Data Releases
Country	Name	Time (GMT)	Expectation	Prior	Comment
UK	Total Trade Balance (SEP)	09:30	-£4700	-£4737
GE	ZEW Survey - Econ. Sentiment (NOV)	10:00	-63.0	-63.0
US	IBD/TIPP Economic Optimism (NOV)	15:00	42.0	41.1

What's going on?

US stocks session ending on a weak note. The labor market figures might matter after all.

The 'anti-hedge fund trade' seems to be losing some of its momentum, but we believe that it will still rule the market until year-end. Our estimates show that hedge funds have increased exposure to EURUSD (long) and that the big exposure to equity markets (MSCI EM and S&P500) is unchanged and large. Exposure to gold has increased a bit. Our estimates show that hedge fund redemptions are still an issue, but it is uncertain whether they increased from October (which was a record).

Fannie Mae is stating that the Treasuries' guarantee of $100B might not be enough to keep the mortgage giant afloat. The company is having great difficulties refinancing and issuing debt and it has made significant writedowns of assets. According to a note to the SEC, the Q3 loss was $29B.

Fitch cut ratings for 4 EE countries and downgraded outlooks for Russia, South Korea and Mexico.

FX

FX	Daily stance	Comment
EURUSD	-	Resistance around 1.2750. A break of 1.2650 => test of 1.2330?
EURJPY	-	Resistance around 125.50. Sell the break of 122.50 for a 120 test.
USDJPY	0	A break of 96.75 support could lead to the 95 area.
GBPUSD	-	Big picture calling for 1.5270 test or new lows.
USDCAD	+	A break of 1.20 could lead to 1.2350.

Equities

Economic Data Releases
Country	Name	Time (GMT)	Expectation	Prior	Comment
IT	Enel	N/A	0,18

Futures

Commodities	Daily Stance	Comment
Gold (XAUUSD)	0	Play the range: Support at 722ish. Resistance around 770.
Silver (XAGUSD)	-	Sell below 9.70 and target 9.25. Stops above 10.
Oil (CLZ8)	-	Sell below 60 with stops above 61.30. Target 58.

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Daily Financial Market Outlook

Daily Forex Fundamentals | Written by Lloyds TSB | Nov 11 08 07:50 GMT |

Overview & economic commentary

UK retail sales fell in October according to the BRC survey released earlier this morning. Annual like-for-like sales dropped 1.5%, extending declines to a third successive month. The RICS survey of house prices revealed a further drop in transaction volumes through October, though new buyer enquiries and sales expectations picked up. The net price balance improved a shade to -81.8 vs -84.5. UK foreign trade figures for September will be published later this morning and are forecast to show a slight narrowing in the global deficit to £8.0bn from £8.2bn in August. It will be interesting to see what happens to exports following the sustained 9% fall in the value of trade-weighted sterling since the middle of Q3. The less favourable international trading environment as a result of weakening global demand has led to a slowdown in annual UK global exports growth from over 20% in July to 14% in August. We suspect that more bad news could lie ahead in the coming months as a recession in the euro zone, the UK's biggest export market, weakens demand for UK goods and services. The car industry in particular is likely to be hit by falling sales. The DMO will sell £3.5bn worth of gilts with a 2015 maturity this morning. In the euro zone, our forecast of a stabilisation in the German ZEW index of economic confidence in November is based on the ECB rate cut last week and the prospect of more monetary easing in December. The 20% rebound in the Dax from the October low may also have tempered pessimism. US markets are closed today for Veterans' Day

Currency commentary

Sterling clawed back some losses in Asia o/n, taking weak data reports on UK retail sales (BRC) and house prices (Rics) in its stride. Even though speculative short £/$ positions have been trimmed in the last few sessions according to weekly IMM flow data, it is difficult to see a substantial break to the upside as long as UK data surprises to the downside. Especially ahead of what may turn out to be a gloomy message by the BoE tomorrow, the risk is that £/$ slips back to below 1.55 over the next 24 hours or so. The same applies to €/£ where a test of 0.82 yesterday may well set the scene for a move up to 0.8250. Emerging market currencies have been relatively stable over the last few days (with the exception of E. Europe) and could well benefit from some return of risk appetite if G20 leaders agree on a global package to support the global economy. €/zloty and €/forint bounced yesterday to the highs since Oct 28 on high volatility.

Major data and events today

UK BRC retail sales monitor (00:01)
Sep -1.1%
Oct (actual) -1.5%
UK RICS house price survey (00:01)
Sep -84.5
Oct (actual) -81.8
UK Global visible trade balance (sa) (09:30)
Aug -£8.2bn
Sep (f'cast) -£8.0bn
Median -£8.0bn Range -£8.5bn:-£7.7bn
UK Non-EU trade balance (sa)(Sep (09:30)
Aug -£5.2bn
Median -£5.0bn Range -£5.4bn:-£4.7bn
UK Official house prices (DCLG) (09:30)
Aug Y-O-Y -3.4%
Sep (f'cast) Y-O-Y -4.0%
German wholesale prices (07:00) (11-16)
Sep -0.6% Y-O-Y +5.8%
Oct (f'cast) -0.5% Y-O-Y +4.7%
Median -0.9% Range -2.3%:-0.3%
German ZEW surey (10:00)
Oct -63.0
Nov (f'cast) -62.5
Median -63.0 Range -81.0:-36.0
US Fixed income markets closed to observe Veteran's Day
ECB member Mersch speaks (09:00)
UK DMO auction of £3.5bn Treasury stock at 4.75% due

Chart 1: UK exports have capitalised on weaker sterling, but falling overseas growth may now dampen demand

Chart 2: Steep decline in new industry orders has caused economic pessimism to spread in Germany

Lloyds TSB Bank
http://www.lloydstsbfinancialmarkets.com

Disclaimer: Any documentation, reports, correspondence or other material or information in whatever form be it electronic, textual or otherwise is based on sources believed to be reliable, however neither the Bank nor its directors, officers or employees warrant accuracy, completeness or otherwise, or accept responsibility for any error, omission or other inaccuracy, or for any consequences arising from any reliance upon such information. The facts and data contained are not, and should under no circumstances be treated as an offer or solicitation to offer, to buy or sell any product, nor are they intended to be a substitute for commercial judgement or professional or legal advice, and you should not act in reliance upon any of the facts and data contained, without first obtaining professional advice relevant to your circumstances. Expressions of opinion may be subject to change without notice. Although warrants and/or derivative instruments can be utilised for the management of investment risk, some of these products are unsuitable for many investors. The facts and data contained are therefore not intended for the use of private customers (as defined by the FSA Handbook) of Lloyds TSB Bank plc. Lloyds TSB Bank plc is authorised and regulated by the Financial Services Authority and is a signatory to the Banking Codes, and represents only the Scottish Widows and Lloyds TSB Marketing Group for life assurance, pension and investment business.

Asia Session Recap

Daily Forex Fundamentals | Written by Forex.com | Nov 11 08 07:15 GMT |

As has been the cycle of one day optimistic, the next day pessimistic, today the optimism over yesterday's China bailout was replaced with pessimism over today's news about Circuit City's bankruptcy, AIG's further bailout, and the big 3 US automakers on the brink of collapse. As has been the case in these situations, risk aversion was back, and EUR/JPY was sold early to a 123.80 low, a dramatic slide from its earlier 128.42 high in early NY trading. With the Yen benefiting across the board in the crosses, we also saw the Dollar gain ground versus the Euro as investors looked for safety. USD/JPY reversed early losses near 97.50 and topped out at 98.28 before settling down close to 98.00. The USD/JPY range has been caught between 96.00-100.00 over the past few weeks. USD/CHF got a boost from risk aversion and saw a high of 1.1835, a level not visited in over a year. Talk of large offers above 1.1850 should help to impede the upside of this pair.

Meanwhile, EUR/USD hit a 126.74 low before gaining 50 pips prior to the London open. Those levels can surely be revisited if the German and ECB ZEW data is worse than expected later on.

Upcoming Economic Data Releases (London Session):

11/11/2008	9:30	UK	Visible Trade Balance GBP/Mn	SEP	-£8198	-£8000
11/11/2008	9:30	UK	Trade Balance Non EU GBP/Mn	SEP	-£5165	-£4950
11/11/2008	9:30	UK	Total Trade Balance (GBP/Mln)	SEP	-£4737	-£4700
11/11/2008	9:30	UK	DCLG UK House Prices (YoY)	SEP	-3.40%	-5.40%
11/11/2008	10:00	GE	ZEW Survey (Econ. Sentiment)	NOV	-63	-63
11/11/2008	10:00	GE	Zew Survey (Current Situation)	NOV	-35.9	-45
11/11/2008	10:00	EC	ZEW Survey (Econ. Sentiment)	NOV	-62.7	-60.5

Forex.com
http://www.forex.com

DISCLAIMER: The information and opinions in this report are for general information use only and are not intended as an offer or solicitation with respect to the purchase of sale of any currency. All opinions and information contained in this report are subject to change without notice. This report has been prepared without regard to the specific investment objectives, financial situation and needs of any particular recipient. While the information contained herein was obtained from sources believed to be reliable, author does not guarantee its accuracy or completeness, nor does author assume any liability for any direct, indirect or consequential loss that may result from the reliance by any person upon any such information or opinions.

Forex Technical Analytics

Daily Forex Technicals | Written by FOREX Ltd | Nov 11 08 08:31 GMT |

CHF

Low parties activity within the previous trading day was not a positive momentum for the realization of earlier drawn up trading planes. Hence and considering the chosen strategy based on assumptions about priority direction lack we assume the possibility of pair return to close 1.1750/70 support range, where it is recommended to evaluate the activity development of both parties according to the charts of shorter time interval. For short-term buying positions on condition of formation of topping signals the targets will be 1.1820/40 and/or further breakout variant up to 1.1880/1.1900, 1.1960/80, 1.2020/40, 1.2100/20. An alternative for sells will be below 1.1620 with targets 1.1560/80, 1.1500/20, 1.1440/60.

GBP

The assumed test of key supports was confirmed with conditions for realization of the pre-planned buying positions. OsMA trend indicator, having marked low activity level preservation of both parties supports preservation of earlier opened buying positions with possible attainment of target levels 1.5740/60, where it is recommended to evaluate the activity development of both parties according to the charts of shorter time interval. For short-term sells on condition of formation of topping signals the targets will be 1.5660/80, 1.5600/20 and/or further breakout variant up to 1.5540/60, 1.5480/1.5500. An alternative for buyers will be above 1.5800 with targets 1.5860/80, 1.5920/40, 1.6000/20, 1.6060/80.

JPY

The pre-planned breakout variant for sells was realized and displayed by OsMA indicator relative bearish activity rise 'supports' earlier opened short positions preservation. At the moment considering ascending direction of indicator chart we assume the possibility of pair return to close 98.10/30 resistance range, where it is recommended to evaluate the activity development of both parties according to the charts of shorter time interval. For short-term sells on condition of formation of topping signals the targets will be 97.40/60 and/or further breakout variant up to 96.80/97.00, 96.20/40, 95.80/96.00. An alternative for buyers will be above 98.60 with targets 99.00/20, 99.60/80, 100.00/20.

EUR

The pre-planned buying positions were realized with attainment of basic assumed targets. OsMA trend indicator, having marked activity parity preservation of both parties as before gives reasons for assumptions about further range rate movement without definiteness in the choice of planning priorities for today. Hence and considering the ascending direction of indicator chart we assume the possibility of pair return to Ichimoku cloud boundaries at 1.2790/1.2810, where it is recommended to evaluate the activity development of both parties according to the charts of shorter time interval. For short-term sells on condition of formation of topping signals the targets will be 1.2700/20, 1.2640/60 and/or further breakout variant up to 1.2580/1.2600, 1.2520/40, 1.2440/60, 1.2360/80. An alternative for buyers will be above 1.2940 with targets 1.3000/20, 1.3000/1.3100, 1.3180/1.3200, 1.3260/80.

FOREX Ltd
www.forexltd.co.uk

EURUSD, AUDUSD, EURCHF Daily Outlook

Daily Forex Technicals | Written by E-Forex | Nov 11 08 08:13 GMT |

EURUSD

The Euro has failed to breach the resistance at 1.2900 on yesterday and collapsed, filling the weekend's gap and also testing support at 1.2675. Since support at 1.2675 is intact, the daily momentum is still bullish but losing strength. Below the said support should resume downtrend and aim towards 1.2525. On the upside, resistance is seen at 1.2790 followed by 1.2900 and 1.3050. On a near term basis, the consolidation is likely to continue but a break out of the triangle formation (daily charts) is expected within the next few trading sessions. None of the triangle sides are being favored therefore we maintain the "wait and see" attitude. Current quote is 1.2730 @07:45 GMT

Support levels: 1.2675, 1.2525 and 1.2335.
Resistance levels: 1.2790, 1.2900, 1.3050 and 1.3260.
Market sentiment: long-term : bearish, mid-term : bearish, short-term : slightly bullish

AUDUSD

Recent break of support at .6780 brings the downside back on focus and the bullish structure remains fragile while trading near support at .6630. Below .6630, support is also seen at .6510 - the 50% retracement of last upward move to .7010. A potential break below the said support will re-establish bearish momentum on the daily studies. Resistance is seen at .6780 followed by .6860 and .7010. Current quote is .6685 @07:45 GMT

Support levels: .6630, .6510 and .6400.
Resistance levels: .6780, .6860, .7010, .7135 and .7245.
Market sentiment: long-term : bearish, mid-term : bearish , short-term : slightly bullish

EURCHF

Resistance at 1.5150 could not be cleared out on yesterday and support at 1.4970 is on focus at the time of this report. A potential break may extend losses towards key support at 1.4835 later today. On the other side, a recovery will be fully signaled by a sustained break of 1.5150. Current quote is 1.5010 @07:45 GMT

Support levels: 1.4970, 1.4900 and 1.4835.
Resistance levels: 1.5050, 1.5100, 1.5150 and 1.5290.
Market sentiment: long-term : bearish, mid-term : bearish , short-term : bullish

E-Forex

Legal disclaimer and risk disclosure

Past performance does not guarantee similar performance in the future. Our forecasts do not constitute an offer to buy or sell, or the solicitation of an offer to buy or sell any foreign exchange transaction. E-Forex.ro accepts no responsibility or liability whatsoever for any expense. We do not warrant or guarantee the accuracy, timelines or completeness to the service or informations you find here.

Technical Analysis for Major Currencies

Daily Forex Technicals | Written by Crown Forex | Nov 11 08 08:00 GMT |

EURO

The euro lead the first attempt to breakthrough the support levels and end the triangular sideways correction after it rebounded from the resistance levels at 1.29; today the 1.2705 is the major support level for the correctional model and the downside wave is approaching and for validation we need to see clear trading below the mentioned level for the pair to start the downside wave which targets 1.2545 at least. The trading range is among the key resistance level at 1.3055 and the key support level at 1.2510. The general trend is to the downside as far as 1.5080 remains intact; targets are set at 1.2480 and 1.2340.

Support: 1.2705, 1.2665, 1.2655, 1.2590, 1.2545
Resistance: 1.2760, 1.2800, 1.2800, 1.2990, 1.3055

Recommendation: Sell euro below 1.2760 with targets at 1.2590, stop loss above 1.2887

GBP

A new technical pattern was formed yesterday as the pair failed to trade below 1.5560, as now the triangular model the pair is trading within set its major resistance level at 1.5800; heavy selling saturation is seen over the Stochastic indicator on a four-hour basis and also valid on hourly basis and for that we might witness an upside correction despite that the short term is still to the downside as far as the mentioned resistance level is intact. The trading range is among the key resistance level at 1.5980 and the key support level at 1.5425. The general trend is to the downside as far as 1.9400 remains intact; targets are set at 1.5450 and 1.5175.

Support: 1.5640, 1.5595, 1.5545, 1.5500, 1.5425
Resistance: 1.5690, 1.5720, 1.5780, 1.5800, 1.5885

Recommendation: Sell sterling below 1.5710 and also sell below 1.5780, with targets at 1.5780, stop loss above 1.5897

JPY

The pair's heavy fluctuations failed the expected upside move to settle for almost 99.50 levels which has become a very strong resistance level for the pair; today the heavy buying saturation on Stochastic and trading below the 100 Hours MA at 95.25 will keep trading to the downside while generally we do not rule out the high fluctuations for the pair. The trading range for today is among the key resistance level at 100.60 and the key support level at 95.75. The general trend is to the downside as far as 104.60 remains intact; targets are set at 91.95 and 89.30

Support: 97.20, 97.05, 96.90, 96.75, 96.45
Resistance: 98.25, 98.35, 98.60, 99.50, 99.90

Recommendation: Sell the pair below 98.25 with targets at 95.75, stop loss above 99.57

CHF

The pair's trading is still consolidating around the pivot levels at 1.1800 which is the separating barrier among the upside and downside waves, the Stochastic Indicator is reflecting heavy buying saturation which leads to high volatility ahead of an upside burst if the pair manages to trade steadily above the mentioned level; due to the buying saturation we favor a downside move in correction to ease the buying pressures and adjust momentum as the ADX indicator is still providing an upside signal over the short term. The trading range is among the key resistance level at 1.2020 and the key support level at 1.1625. The general trend is to the upside as far as 1.0570 remains intact; targets are set at 1.1945 and 1.2065.

Support: 1.1765, 1.1745, 1.1715, 1.1685, 1.1655
Resistance: 1.1835, 1.1860, 1.1895, 1.1915, 1.1950

Recommendation: Withhold yesterday's positions (buy the pair above 1.1745 with targets at 1.1915, stop loss below 1.1643)

CAD

As expected the pair was capable of trading above the technical pattern's resistance and now the chance is valid to form a new upside pattern which might be valid if the pair was steady above 1.2025; today the high fluctuations are clear as the pair might retest 1.1800 levels which were breached yesterday yet the 1.2025-45 is now logical on all time frames which is the first target for the upside wave. The trading range is among the key resistance level at 1.2200 and the key support level at 1.1730. The general trend is to the upside as far as 1.1780 remains intact; targets are set at 1.3305 and 1.3465.

Support: 1.1930, 1.1895, 1.1860, 1.1825, 1.1800
Resistance: 1.1990, 1.2025, 1.2545, 1.2095, 1.2100

Recommendation: Buy the pair above 1.1895 with targets at 1.2000, stop loss below 1.1791

Crown Forex

Technical Analysis for Crosses

Daily Forex Technicals | Written by Crown Forex | Nov 11 08 07:44 GMT |

EUR/JPY

The Euro fell yesterday against the British Pound from the 0.8196 resistance level which so far was able to stop the pair's upside wave, however the momentum indicators continue to show mixed signals which means that the pair could still fluctuate heavily among the 0.8104 and the 0.8196 levels and until one of those levels is breached the pair should continued moving within its short term sideway wave

Support: 124.70, 124.23, 123.92, 123.56, 123.14
Resistance: 125.06, 125.39, 125.74, 125.94, 126.41

Recommendation: Sell below 125.39 with a target at 123.92 and a stop loss above 126.41

GBP/JPY

The British Pound dropped against the Japanese Yen as the pair failed to breach the 23.6% correctional level at 156.91, while today the pair is still struggling to breach the 20 (4 hours) moving average at 154.23, which leads us to believe the pair is poised for more drops at least on intraday basis and the target seems to be set at 151.37 at least, while the mixed signals provided from the momentum indicators still point that the pair will fluctuate heavily.

Support: 152.70, 152.31, 151.80, 151.37, 149.95
Resistance: 153.24, 153.78, 154.23, 154.71, 155.25

Recommendation Sell below 154.23 with a target at 151.37 and a stop loss above 156.91

EUR/GBP

Support: 0.8144, 0.8133, 0.8119, 0.8104, 0.8090
Resistance: 0.8165, 0.8180, 0.8196, 0.8210, 0.8230

Recommendation: Sell below 0.8196 with a target at 0.8104 and a stop loss above 0.8230

Crown Forex

China's October Consumer Prices: Summary (Table)

By Cesilia Han

Nov. 11 (Bloomberg) -- Following is a summary of China's consumer prices in October released by the Beijing-based National Bureau of Statistics.

===============================================================================
          Oct.  Sept.   Aug.   July   June    May  April  March   Feb.     YTD
          2008   2008   2008   2008   2008   2008   2008   2008   2008    2008
===============================================================================
YoY%       4.0%   4.6%   4.9%   6.3%   7.1%   7.7%   8.5%   8.3%   8.7%    6.7%
MoM%      -0.3%   0.0%  -0.1%   0.1%  -0.2%  -0.4%   0.1%  -0.7%   2.6%    n/a
===============================================================================

Source: National Bureau of Statistics.

To contact the reporter on this story: Cesilia Han in Seoul at chan4@bloomberg.net

FX Technical Analysis

Daily Forex Technicals | Written by Mizuho Corporate Bank | Nov 11 08 07:23 GMT |

EURUSD

Comment: Little to add as we consolidate in a small 'triangle' and at-the-money implied volatility dips to a still relatively expensive 21.00%. Obviously we cannot hold inside the formation for much longer but be careful as a 'false break' is very possible.

Strategy: Attempt longs at 1.2700; stop below 1.2495. First target 1.2900, then 1.3100

Direction of Trade: →

Chart Levels:

Support	Resistance
1.2700 "	1.2927
1.2675/1.2653	1.3
1.2527*	1.3117*
1.2445	1.32
1.2329**	1.3300*

GBPUSD

Comment: Dull and disappointing and we shall probably have to put with more of the same this week. Beware drawing trendlines too tightly and note that at-the-money one-month implied volatility remains very high at 23.00%.

Strategy: Attempt longs at 1.5625; stop below 1.5400. First target 1.6000 then 1.6400

Direction of Trade: →

Chart Levels:

Support	Resistance
1.5557 "	1.58
1.5535	1.5885
1.5400*	1.605
1.53	1.62
1.5278/1.5260**	1.64

USDJPY

Comment: Same old story as we continue to consolidate in a small range. Expect more of the same today noting that the 'Lagging' line at 97.97 is approaching candle resistance for the next fortnight between 99.00 and 102.00. Note that despite decent volume open interest in the futures contract is less than half last year's peak.

Strategy: Attempt small shorts at 97.95, adding to 99.00; stop well above 100.00. First target 97.00, then 96.00 below which should probably trigger a sudden collapse to 92.00.

Direction of Trade: →

Chart Levels:

Support	Resistance
97.48 "	98.31
97	99.47
96.75	99.92
96.35	100.56*
96.08*	101.6

EURJPY

Comment: Consolidating surprisingly neatly under the 38% retracement resistance level of the final leg lower. Therefore we feel there is still a small chance of a squeeze above the recent high at 131.00, at which time at-the-money implied volatility should increase.

Strategy: Possibly attempt small shorts at 124.50 but only if prepared to add to 128.50; stop above 131.25. Cover shorts ahead of 122.00

Direction of Trade: →

Chart Levels:

Support	Resistance
123.80 "	125.5
123.43	126.95
122.7	128.5
122.00*	130.00*
121.4	131.05*

Mizuho Corporate Bank

Disclaimer

The information contained in this paper is based on or derived from information generally available to the public from sources believed to be reliable. No representation or warranty is made or implied that it is accurate or complete. Any opinions expressed in this paper are subject to change without notice. This paper has been prepared solely for information purposes and if so decided, for private circulation and does not constitute any solicitation to buy or sell any instrument, or to engage in any trading strategy.

India's Jalan Says Central Bank Needs to Reduce Rates

By Kartik Goyal and Sam Nagarajan

Nov. 11 (Bloomberg) -- India needs to cut interest rates further as two reductions in less than a month haven't been enough to make loans affordable for companies and consumers, a former central bank governor said.

Policy makers should lower benchmark rates further ``if necessary'' to enable banks to cut their loan rates, Bimal Jalan, the top official at the Reserve Bank of India from 1997 to 2003, said in an interview yesterday in New Delhi. Measures taken by the central bank and the government in the past month have helped bring the crisis ``under relative control.''

The global financial crisis has led to a shortage of money in India's banking system, affecting lenders' ability to extend loans to companies and individuals. That's eroding consumer demand and has prompted production cuts at companies including Ashok Leyland, the nation's second-biggest maker of commercial vehicles, and JSW Steel Ltd.

Demand for domestic loans increased after funds dried up overseas following the seizure in credit markets and the collapse of Lehman Brothers Holdings Inc. on Sept. 15. State Bank of India, the country's largest, cut the rate it charges its best clients to 13 percent last week from 13.75 percent, the highest in a decade. ICICI Bank Ltd., the second biggest, hasn't reduced its 17.25 percent charge.

``We need to create conditions so that loans are available at interest rates at pre-crisis levels, as other sources of finances have dried up,'' said Jalan, 67. ``I am in favor of further reducing the cash-reserve ratio and the repurchase rate, if necessary.''

Slower Growth

India's $1.2 trillion economy may expand at the slowest pace in four years, the central bank estimates, as the credit crisis tips the world's industrialized nations into a recession. Larsen & Toubro Ltd., the country's biggest engineering firm, said its borrowing costs will climb in the next six months and DLF Ltd., India's largest developer, last week said its hotel venture with Hilton Hotels Corp. may be delayed by up to 18 months as it tries to secure funds.

The benchmark Bombay Stock Exchange Sensitive Index has declined almost 50 percent this year on concern slowing demand will hurt companies' profits.

India's central bank cut its benchmark repurchase rate by 1.5 percentage points in two stages starting Oct. 20 to 7.5 percent from a seven-year high of 9 percent. It also lowered the amount lenders must set aside as reserves to cover deposits by 3.5 percentage points in a month, freeing up as much as 1.4 trillion rupees ($29.5 billion) in cash to ease lending.

`Absolutely Appropriate'

``The action taken by the Reserve Bank seems to be absolutely appropriate,'' the Cambridge and Oxford-educated Jalan said. ``The most important thing is giving assurance to all the players that a line of credit is available at a price before all the shakiness started.''

Higher borrowing costs and prices have discouraged spending by consumers who rely on loans to buy cars and motorbikes. Passenger car sales in India fell 6.6 percent in September, the most in more than three years, the Society of Indian Automobile Manufacturers said this week.

Vehicles sales, also including trucks, two-wheeled scooters and motorcycles, tumbled 14 percent, the biggest drop in almost eight years, the automobile grouping said Nov. 10. India's industrial production growth grew 1.3 percent in August, the slowest pace of expansion on record.

Cooling inflation has given the central bank more room for interest-rate cuts, Jalan said. India's inflation rate, measured by wholesale prices, slowed to a five-month low of 10.68 percent in the week ended Oct. 18 because of waning consumer demand and a decline in commodity prices.

``Circumstances are good as far as inflation is concerned,'' he said. ``If you see a spiking of inflation, then your options become limited.''

To contact the reporter on this story: Kartik Goyal in New Delhi at kgoyal@bloomberg.net.

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