Coffee Production to Rise 15% to Record on Brazil, Licht Says

By Claudia Carpenter

Nov. 13 (Bloomberg) -- Global coffee production will rise 15 percent to a record 139 million bags this season on bigger crops from Brazil and Vietnam, the world's largest growers, F.O. Licht said in its first estimate for the harvest that started Oct. 1.

The jump from 121.1 million bags last season will include a Brazil crop of 49.7 million bags and a Vietnam harvest of 20.9 million bags, F.O. Licht analyst Stefan Uhlenbrock said in an interview today from Ratzeburg, Germany. A bag weighs 60 kilograms (132 pounds).

``Large sales and exports from Brazil and all this coffee from Vietnam will reach the market very soon, and that could put further pressure on prices in the short term,'' Uhlenbrock said. Big crops will help rebuild stockpiles because Brazil's harvest next year will be smaller, he said.

Its harvest will be up from 37.3 million bags last season and the most since the record 52.4 million in 2002-03, he said. Vietnam's crop was a record 21.3 million in 2006-07. Crops in India, Indonesia and Peru will also be larger, he said.

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

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Gold May Gain in London as Investors Seek Haven From Recession

By Stuart Wallace

Nov. 13 (Bloomberg) -- Gold, little changed today in London, may gain as investors seek to diversify their portfolios after equities plunged and Germany, Europe's largest economy, entered its worst recession in at least 12 years.

U.S. stocks fell for a third day yesterday and Asian and European equities extended the rout today. The German economy contracted 0.5 percent in the third quarter. The global hedge fund industry lost $100 billion of assets last month, Singapore- based data provider Eurekahedge Pte said.

``It's a massive deleveraging, there's blood on the streets everywhere,'' Peter McGuire, managing director at Commodity Warrants Australia, said in a Bloomberg Television interview from Sydney.

Gold for immediate delivery advanced $1.40, or 0.2 percent, to $713.70 an ounce as of 11:31 a.m. in London. Futures for December dropped $5.60, or 0.8 percent, to $712.70 an ounce in electronic trading on the Comex division of the New York Mercantile Exchange.

Gold may climb above $1,000 in 2011 as mine output drops, mining costs rise and demand increases, Morgan Stanley said.

``Mining production actually peaked in 2001 and has since been declining,'' the bank's commodity analyst Hussein Allidina said in an interview in Singapore. ``When I look at the demand side, as income growth accelerates, the consumption of gold for jewelry purposes increases.''

South Africa, the world's biggest precious-metals producer, said mining production fell 3.5 percent in September from a year ago. Gold output declined 18 percent, while production of other metals fell 1.2 percent, Pretoria-based Statistics South Africa said today.

Gold Holdings

Gold in the SPDR Gold Trust, the largest exchange-traded fund backed by bullion, shrank by 270 kilograms (8,681 troy ounces). The amount of gold now stands at 748.94 metric tons, according to figures posted on the company's Web site. The fund was at a record 770.64 tons Oct. 13, overtaking Japan as the world's seventh-largest gold holding.

Among other precious metals for immediate delivery, silver rose 0.5 cent, or 0.1 percent, to $9.355 an ounce. Platinum rose $1.50, or 0.2 percent, to $821.50 an ounce and palladium declined $4, or 1.9 percent, to $210.25 an ounce.

Tanaka Kikinzoku Kogyo K.K., Japan's largest bullion retailer, said its sales of platinum bars to local investors rose to a record in October as falling prices spurred demand.

Commodity derivatives held by companies in the over-the- counter market rose 56 percent during the first half to a record $13.2 trillion, according to the Bank for International Settlements. Derivatives expanded for all the commodities tracked except gold, the Basel, Switzerland-based bank said in a statement today.

To contact the reporter on this story: Stuart Wallace in London at swallace6@bloomberg.net

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Oil Rebounds From 21-Month Low on Possible Early OPEC Meeting

By Grant Smith

Nov. 13 (Bloomberg) -- Crude oil rose, rebounding from its lowest in 21 months, after a plan was put forward for OPEC to hold a full meeting in Cairo this month before its scheduled December gathering.

Ministers and officials from the Organization of Petroleum Exporting Countries are having consultations by phone and may expand the Nov. 29 Cairo summit for OPEC's Arab leaders to a full group meeting, according to a delegate. Oil earlier dropped below $55 a barrel as the International Energy Agency made the biggest cut to its oil demand forecast in 12 years.

``OPEC may decide to cut 1 million barrels per day at the Cairo OAPEC meeting at the end of the month,'' Johannes Benigni, chief executive officer of Vienna-based consultant JBC Energy, said today.

Crude oil for December delivery rose as much as 84 cents, or 1.5 percent, to $57 a barrel on the New York Mercantile Exchange. The contract traded at $56.81 a barrel as of 12:40 p.m. London time.

The contract earlier fell as much as $1.49, or 2.7 percent, to $54.67 a barrel, the lowest since Jan. 30, 2007.

The IEA, an adviser to 28 nations, cut its 2009 oil demand estimate by 670,000 barrels a day, or 0.8 percent, to 86.5 million barrels a day following weaker economic forecasts from the International Monetary Fund, it said in a monthly report today. The agency trimmed its outlook for 2008 for an eighth time this year, cutting its fourth-quarter assessment by 1 million barrels a day.

German Recession

The German economy entered its worst recession in at least 12 years as the global financial crisis curbs exports and spending, government data showed today. Last week, the IMF warned of the first simultaneous recession in the U.S., Japan and Europe in more than 60 years.

U.S. crude-oil stockpiles probably increased 1 million barrels in the week ended Nov. 7 from 311.9 million the week before, according to the median of 13 analyst estimates before the Energy Department report.

The department is scheduled to release its weekly report today at 11 a.m. in Washington. The report is being delayed by a day because the Veterans Day holiday on Nov. 11.

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

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Copper, Aluminum Rebound From 3-Year Lows After Drop in Dollar

By Claudia Carpenter

Nov. 13 (Bloomberg) -- Copper and aluminum rebounded from three-year lows in London as a drop in the dollar may help revive demand for industrial metals. Zinc and nickel also rose.

Copper has dropped 46 percent this year and aluminum is down 20 percent as some economies, including Germany, entered a recession and the dollar climbed, raising costs for buyers using other currencies. The relationship between the euro-dollar exchange rate and the London Metal Exchange Index has strengthened, with a correlation of 0.59 since mid-July. The rate was 0.40 in the previous four months.

``Recently, the correlation between the dollar and metals prices has been extremely high,'' said Leon Westgate, an analyst at Standard Bank Ltd. in London.

Copper for delivery in three months increased $14.50 to $3,635.50 a metric ton as of 12:29 p.m. on the London Metal Exchange after earlier declining to $3,515 a ton, the lowest since Sept. 19, 2005. Aluminum was unchanged at $1,925 a ton and earlier traded at $1,903, the lowest since Oct. 21, 2005.

Prices had declined earlier today after China's industrial output grew at the slowest pace in seven years, heightening speculation that demand for industrial metals is waning.

Production rose 8.2 percent in October from a year earlier, the statistics bureau said today. None of the 18 economists in a Bloomberg survey expected such a small increase.

``No one's protected,'' said James Roberts, a broker at Sucden (U.K.) Ltd. in London. ``Until you start to see aggressive destocking or a real turn in consumer buying habits, or just general macroeconomic positive news, you're probably looking one way'' down for prices, he said.

Germany in Recession

The economy in Germany, the world's third-largest copper consumer after China and the U.S., contracted 0.5 percent in the third quarter and 0.4 percent in the second quarter -- its worst recession in at least 12 years.

Aluminum will have a supply surplus of 850,000 tons next year and 1.4 million in 2010, BNP Paribas forecast in a report yesterday.

Lead for three-month delivery rose $10 to $1,310 a ton and zinc added $11 to $1,160 a ton. Tin declined $50 to $13,650 a ton and nickel rose $190 to $10,690 a ton.

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

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Gulf Shares Fall as Banks Tighten Credit; Kuwait Halts Trading

By Haris Anwar

Nov. 13 (Bloomberg) -- Persian Gulf stocks tumbled, sending Dubai's index lower for a sixth day and spurring a trading halt in Kuwait, as banks tightened credit terms and oil plunged to a 21-month low.

Emaar Properties PJSC slid to the lowest in more than four years as the Middle East's largest real-estate developer said it is reviewing its recruitment policies amid the property slowdown. Arkan Building Materials Co. dropped to the lowest in seven months. Industries Qatar, which taps the largest natural gas field to make petrochemicals, declined to the lowest since April last year.

The Dubai Financial Market General Index tumbled 4.9 percent to 2,106.41. The gauge lost 25 percent this week as concern deepened that the global credit crisis and slumping crude prices will slow the regional property market. The Abu Dhabi Securities Exchange General Index dropped 1.5 percent.

``Dubai and Abu Dhabi are exposed to the real-estate sector, and that's making investors nervous,'' Ajeev Gopinathan, vice- president at Gulf Baader Capital Markets SAOC, said in a phone interview from Oman. ``It's very difficult to quantify the magnitude of this problem.''

Kuwait suspended trading as a court ordered its closure to protect investors from further losses after the bourse's main index slid to the lowest since July 2005. The Kuwait Stock Exchange Index fell 1.8 percent to 8,691 before trading was stopped at 9:47 a.m. local time. The measure declined 10 percent this week.

Kuwait's Closure

The market will stay closed until Nov. 17 when the court will sit again to consider whether to extend the suspension, Adel Abdul Hadi, the Kuwaiti lawyer who represented small stock market traders at the court, said in a phone interview from Kuwait City today.

``This is a negative development for all regional markets,'' said Sherif Abdel Khalek, regional sales executive at Beltone Securities Brokerage in Dubai. ``Closing down the stock exchange will not solve the problem. It will add to the negative sentiments.'' Kuwait is the only Gulf exchange to suspend trading this year because of the global credit crisis.

Kuwait's benchmark has lost 31 percent this year, while Dubai's measure slumped 64 percent. Today's drop left Dubai's benchmark index valued at 5 times the earnings of its 29 companies, the lowest level since at least February 2007, data compiled by Bloomberg show. Abu Dhabi's index trades at 6.8 times profit. The MSCI Emerging Markets Index is valued at 7.8 times earnings.

U.A.E.'s Property Market

Dubai property buyers will lose 30 percent of what they have paid if they default, cancel, or breach their purchase contracts, Gulf News reported, citing the Land Department.

United Arab Emirates banks, including Emirates NBD, the country's largest, have suspended retail-credit facilities to expatriate employees working for companies in the real-estate industry because of the rising risk of default, Gulf News reported. Emirates NBD Chief Investment Officer Michael Preiss in an interview with Bloomberg denied that there is a blanket ban on lending to real-estate employees, while acknowledging that lending criteria have been tightened at the bank.

Emaar declined 5.6 percent to 3.18 dirhams, the lowest since October 2004. The shares have dropped 36 percent this week. ``To address the new challenges we face, it is important to reorient our growth strategies and align our business model to tackle new realities,'' Emaar said today in an e-mailed statement.

Oil's Drop

Arkan, the Abu Dhabi-based construction supplies maker, tumbled 4.7 percent to 4.27 dirhams, the lowest since April 14.

Oman's Muscat Securities Market 30 Index lost 2.4 percent. In Qatar, the DSM 20 Index retreated 2.6 percent, while the Bahrain All Share Index declined 0.9 percent. Saudi Arabia's market is closed for the weekend.

Crude oil fell below $55 a barrel as slowing economies of the major consuming nations cuts demand for fuels. The Organization of Petroleum Exporting Countries' Gulf members, which produce almost a fifth of the world's oil, have used record crude income to embark on infrastructure projects including man-made islands and the world's tallest tower. Oil for December delivery fell as much as $1.49, or 2.7 percent, to $54.67 a barrel on the New York Mercantile Exchange.

Industries Qatar tumbled 5.7 percent to 77.6 riyals.

The following stocks also rose or fell in the region. Stock symbols are in parentheses after company names:

Aldar Properties PJSC (ALDAR UH), Abu Dhabi's largest developer by market value, gained 2.6 percent to 4.3 dirhams. HSBC Holdings Plc yesterday reiterated its ``overweight'' recommendation on the stock as it provides ``the best shelter'' amid regional downturn because of the company's strong ties with the government.

Arab Insurance Group BSC (ARIG UH) dropped 8.6 percent to 2.55 dirhams in U.A.E. trading. The Bahrain-based insurer said its third-quarter loss widened to $22.3 million.

Dubai Islamic Insurance & Reinsurance Co. (AMAN UH) fell 9.8 percent to 1.48 dirhams. The insurer known as Aman said its third-quarter loss widened on losses from investment income.

To contact the reporter on this story: Haris Anwar in Dubai on Hanwar2@bloomberg.net

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Europe, Asia Stocks Fall; Barclays, Royal Bank, Intel Decline

By Adria Cimino

Nov. 13 (Bloomberg) -- Stocks fell in Europe and Asia as Germany sank into recession, the OECD forecast a global slump and Intel Corp. cut its sales target. U.S. index futures were little changed.

Russia's Micex Index tumbled as much as 17 percent, and Kuwait suspended stock trading. Barclays Plc and Royal Bank of Scotland Group Plc led banks lower, sliding more than 4 percent, after the Organization for Economic Cooperation and Development reduced its outlook for global growth and predicted an ``extended period of financial headwinds.'' Intel sank 5.7 percent in Germany.

Europe's Dow Jones Stoxx 600 Index lost 1.1 percent to 202.90 at 1:20 p.m. in London, pushing this year's retreat to 44 percent. The OECD forecast comes after a report showed Germany entered its worst recession in at least 12 years.

``We'll see equities go lower,'' said Andrew Lynch, who manages about $3 billion at Schroder Investment Management Ltd. in London. ``People will have to revise down further their outlook for corporate earnings'' to reflect the slowdown.

Futures on the Standard & Poor's 500 Index added less than 0.1 percent, gyrating between gains and losses as speculation the Federal Reserve may cut interest rates to boost economic growth offset lower forecasts from Intel and Wal-Mart Stores Inc. The MSCI Asia Pacific Index sank 4.7 percent.

Earnings for the 1,493 companies in western Europe that reported results since Oct. 7 declined 17 percent on average, trailing expectations by 7.3 percent, Bloomberg data show.

National benchmarks fell in 11 of the 18 western European markets. The U.K.'s FTSE 100 lost 1.2 percent. Germany's DAX gained 0.1 percent, and France's CAC 40 increased 0.3 percent.

Trading Halted

Russia's Micex Index fell as much as 17 percent and was 7.5 percent lower at 3:05 p.m. in Moscow after it reopened following a 30-minute trading suspension. A court in Kuwait ordered a shutdown as traders lobbied for support after a sixth day of declines. The MSCI Emerging Markets Index slid 4.7 percent.

More than $30 trillion has been erased from the value of global equity markets this year as credit losses and writedowns totaled $950 billion in the worst financial crisis since the Great Depression.

Barclays sank 4.9 percent to 160 pence, and Royal Bank of Scotland lost 6.1 percent to 52.6 pence.

Gross domestic product in the countries sharing the euro currency will contract 0.5 percent next year and U.S. GDP growth will retreat 0.9 percent, according to the OECD. GDP in Japan will contract 0.1 percent in 2009, the Paris-based group said.

``Underlying the projections is an assumption that the extreme financial stress since mid-September is short-lived, but will be followed by an extended period of financial headwinds through late 2009,'' the group said.

Germany Recession

GDP in Germany, Europe's largest economy, dropped a seasonally adjusted 0.5 percent from the second quarter, when it fell a revised 0.4 percent, a report showed today. Economists expected a 0.2 percent decline in a Bloomberg survey.

Zurich Financial Services AG slid 3.6 percent to 208.1 francs. Switzerland's biggest insurer halted a share buyback program after third-quarter profit fell 90 percent on debt writedowns and losses from hurricanes in the U.S.

Intel sank 5.7 percent to $12.75. The world's largest semiconductor maker cut its fourth-quarter revenue estimate by about $1 billion. The company cited ``significantly weaker'' demand across its entire product line.

STMicroelectronics NV, Europe's largest maker of semiconductors, lost 4.3 percent to 5.89 euros. Infineon Technologies AG, the region's second-biggest, retreated 1.1 percent to 2.28 euros.

LG Display Co. tumbled 11 percent to 20,100 won in South Korea, while Sharp Corp. fell 8.4 percent to 667 yen in Japan.

BT Group

BT Group Plc surged 9.1 percent to 122.7 pence. The company aims to cut about 6 percent of its workforce in the year through March to improve profitability after reporting a slide in second-quarter earnings.

Reed Elsevier Plc said it's ``on track'' for good sales growth, margin improvement and growth in adjusted earnings per share. The stock rose 7.1 percent to 523.5 pence.

Hochtief AG, Germany's biggest construction company, jumped 7.7 percent to 27.24 euros. Deutsche Bank AG raised its recommendation on the shares to ``buy'' from ``hold.''

Bayerische Motoren Werke AG, the world's largest maker of luxury cars, climbed 4.5 percent to 21.59 euros. BMW Finance NV, a unit of BMW, plans to sell five-year bonds in euros, according to a banker involved in the transaction.

To contact the reporter on this story: Adria Cimino in Paris at acimino1@bloomberg.net.

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U.K. Stocks Drop, Led by Energy Producers; HSBC, ICAP Retreat

By Sarah Thompson

Nov. 13 (Bloomberg) -- U.K. stocks declined for a third day, led by energy producers, after crude oil fell below $55 a barrel and metals prices slid as the global economic slump cuts demand for fuel and crimps the outlook for corporate earnings.

BP Plc, Europe's second-largest oil company, and BHP Billiton Ltd. dropped. HSBC Holdings Plc slid after Cazenove recommended selling shares in Europe's biggest bank on global recession concerns.

The benchmark FTSE 100 Index lost 45.88, or 1.1 percent, to 4,136.14 at 12:53 p.m. in London. The FTSE All-Share Index declined 1.1 percent and Ireland's ISEQ Index climbed 0.4 percent.

The German economy, Europe's largest, contracted more than economists expected in the third quarter, confirming it has entered its worst recession in at least 12 years as the global financial crisis curbs exports.

``Equity markets remain very fragile on this further evidence of the dire state of the global economy,'' said Nick Brind, a London-based money manager at New Star Asset Management, which oversees about $25 billion. ``This is further reflected by the collapse in oil and commodity prices.''

BP, Europe's second-largest oil company, slid 3.1 percent to 461.5 pence. Royal Dutch Shell Plc, the biggest, lost 0.9 percent to 1,585 pence.

Crude oil for December delivery earlier fell as much as $1.49, or 2.7 percent, to $54.67 a barrel, the lowest since Jan. 30, 2007.

BHP Billiton Ltd., the world's largest mining company, slipped 3.3 percent to 917.5 pence. Rio Tinto Group, the second- biggest, dropped 1.8 percent to 2,501 pence.

Copper Tumbles

Copper tumbled to the lowest in more than three years, as global stockpiles climbed to the highest since 2004, adding to evidence a deteriorating global economy is reducing demand for industrial metals.

HSBC retreated 3 percent to 678.75 pence. The lender was cut to ``underperform'' at Cazenove to reflect a ``recession in several of HSBC's major geographic markets, together with continued high levels of impairment at HSBC Finance.''

ICAP Plc, the biggest interbank broker, and rival Tullett Prebon Plc dropped 17 percent to 236.75 pence and 6.1 percent to 161.25 pence respectively. Morgan Stanley downgraded both stocks to ``underweight,'' citing a ``tough revenue outlook.''

``We expect revenue declines of 5-25 percent by product in 2009 following our work with heads of trading/sales and consultants,'' the analysts wrote in a research note dated today.

`Solid'

BT Group Plc jumped 9.3 percent to 123 pence after the U.K.'s largest phone company said it aims to cut about 6 percent of its workforce in the year through March to improve profitability after reporting second-quarter earnings.

``BT's results are solid,'' said Jesper Kruger, a fund manager in Copenhagen at ATP, which has about $64 billion. ``This is helping European telecoms today as many were expecting more negative news from BT after the November profit warning.''

Vodafone Group Plc, the world's biggest mobile-phone company, increased 1.1 percent to 123.3 pence.

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

U.K. companies:

BAE Systems (BA/ LN) gained 4.5 pence, or 1.4 percent, to 338.25. The defense company is in talks to sell up to 24 Eurofighter Typhoon fighter aircraft to Oman in a deal worth at least 1.4 billion pounds ($2.1 billion), the Financial Times reported, citing unidentified people in the U.K. defense industry close to the negotiations.

Catlin Group Ltd. (CGL LN) increased 9.5 pence, or 2.6 percent, to 371.5. The owner of the largest insurance unit at Lloyd's of London said premium revenue rose in the first nine months of the year as international sales climbed.

Intertek Group Plc (ITRK LN) advanced 9.5 pence, or 1.3 percent, to 753.5. The world's largest tester of consumer goods said 10-month sales grew 27 percent on acquisitions and rising demand from toy, petroleum and mineral clients.

London Stock Exchange Group Plc (LSE LN) slid 66.5 pence, or 12 percent, to 513. Europe's oldest independent market reported fiscal first-half profit that trailed some analysts' estimates.

SABMiller Plc (SAB LN) added 6 pence, or 0.7 perecnt, to 911.5. The world's third-largest brewer said it may scrap projects in slowing markets from eastern Europe to Colombia as costs soar and demand wanes.

To contact the reporter on this story: Sarah Thompson in London at sthompson17@bloomberg.net.

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U.S. Stock-Index Futures Gyrate on Intel, Rate-Cut Speculation

By Adam Haigh

Nov. 13 (Bloomberg) -- U.S. stock-index futures bounced between gains and losses as speculation the Federal Reserve may cut interest rates further to boost economic growth offset lower forecasts from Intel Corp. and Wal-Mart Stores Inc.

Intel, whose chips run more than three-quarters of the world's computers, sank 5.6 percent in Germany as it said demand was ``significantly weaker'' across its entire product line.

The Standard & Poor's 500 Index's three-day slump has left the benchmark for U.S. equities within 0.5 percent of a five- year low. Stocks tumbled yesterday as the Treasury's plan to use bailout funds to shore up consumer lending and Best Buy Co.'s warning of a ``seismic'' slowdown in spending yesterday stoked concern the credit crisis is far from over.

Futures on the S&P 500 expiring in December added 0.4 percent to 856.6 at 12:24 p.m. in London, after earlier falling as much as 1.4 percent. Dow Jones Industrial Average futures gained 0.3 percent to 8,304. Nasdaq-100 Index futures declined 0.3 percent to 1,159.5 on Intel's results.

``Tech is a super-cyclical sector and shows you how difficult it is in economies globally,'' said Job Curtis, a fund manager at Henderson Global Investors Ltd. in London, which has about $125 billion. ``Intel shows just how hard things are,'' he said in a Bloomberg Television interview.

Futures trading indicated a 80 percent chance that the U.S. central bank will lower interest rates by 75 basis points to 0.5 percent at its next meeting, compared with a 58 percent probability a week ago.

``The Fed is going to keep cutting rates until something happens that is positive for economic growth,'' said John Haynes, senior U.S. equity strategist at Rensburg Sheppards in London. ``They will do whatever it takes.''

Global Slump

More than $29 trillion has been erased from the value of global equity markets this year and the S&P 500 is down 42 percent as credit losses and writedowns neared $950 billion. The Organization for Economic Cooperation and Development today cut its 2009 global forecast for the second time this year and urged governments to take more measures to fight a recession.

Intel sank 5 percent to $12.76 in Germany after saying its profit margin also will fall short of an earlier prediction. The company cited ``significantly weaker'' demand across its entire product line.

National Semiconductor Corp. may be active. The maker of chips for the five largest mobile-phone manufacturers reduced its revenue forecast for the second quarter and said it will cut about 5 percent of its workforce.

Wal-Mart

Wal-Mart slid 0.5 percent to $52.34 in New York. Full-year profit will be $3.42 to $3.46 a share, the company said. It had projected $3.43 to $3.50. Analysts estimated $3.48.

The U.S. trade deficit probably narrowed in September as falling oil prices reduced the value of imports, economists said before a report today. The Commerce Department's report on trade is due at 8:30 a.m. in Washington. Estimates of the 71 economists surveyed ranged from deficits of $52.8 billion to $59 billion.

Also at 8:30 a.m., a report from the Labor Department may show 480,000 people filed initial applications for unemployment insurance last week, little changed from 481,000 a week earlier, according to the survey median. On average, 321,000 workers per week submitted claims last year.

For Related News:

To contact the reporter on this story: Adam Haigh in London at ahaigh1@bloomberg.net.



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Copper falls to 3-yr low on weak demand outlook

* Copper hits 3-year low on weak demand outlook

* Stronger dollar, weaker equity markets add pressure

* China's October copper and nickel output plunge

(Adds fresh comment/details, changes dateline PVS MANILA)

By Julie Crust

LONDON, Nov 13 (Reuters) - Copper fell to a three-year low on Thursday on demand concerns as data showed China's output of the industrial metal fell last month as producers responded to the global slowdown.

The metal was also pressured by the stronger dollar, which makes metals more expensive for holders of other currencies, weaker equity markets and oil prices falling to a 22-month low.

"All of the macro indicators are negative and there is no change expected going forward," said Calyon analyst Robin Bhar. "For the remainder of this year we are going to see new lows plumbed."

Three-month copper MCU3 on the London Metal Exchange dropped as low as $3,520 a tonne, its weakest price since September 2005. It was trading at $3,545 a tonne at 1040 GMT compared with $3,621 at the close on Wednesday.

Analysts doubt the drop in China's production of copper and other metals will lead to tighter supply at a time when demand for raw materials is weakening.

China said its output of the industrial metal dropped 8 percent on the year to an eight-month low in October as manufacturers cut production in response to weakening demand.

"That's not a surprise," said Judy Zhu, analyst at Standard Chartered Bank in Shanghai.

"We've heard production cuts by smelters lately and I don't think it's going to create tight supply in the international market because the smelters are just trying to keep their inventory in check."

China's production of refined copper fell to 293,900 tonnes in October, according to the National Bureau of Statistics. Aluminium output dropped 0.9 percent, nickel fell 18 percent but zinc output rose 3.6 percent. [ID:nHKG339295]

Despite the cuts by producers, mostly Chinese smelters, stocks of copper in LME warehouses rose another 4,625 tonnes on Wednesday to 270,100 tonnes, their highest since March 2004.

Metal Prices at 1038 GMT Metal Last Change Pct Move End 2007 Ytd Pct

move LME Cu 3535.00 -86.00 -2.38 6670.00 -47.00 SHFE Cu* 29050.00 -190.00 -0.65 56880.00 -48.93 LME Alum 1902.00 -23.00 -1.19 2403.00 -20.85 SHFE Alu* 13630.00 -130.00 -0.94 18180.00 -25.03 COMEX Cu** 164.95 0.00 +0.00 303.05 -45.57 LME Zinc 1148.00 -2.00 -0.17 2370.00 -51.56 SHFE Zinc* 9565.00 95.00 +1.00 18950.00 -49.53 LME Nick 10375.00 -125.00 -1.19 26350.00 -60.63 LME Lead 1275.00 -25.00 -1.92 2550.00 -50.00 LME Tin 13350.00 -350.00 -2.55 16400.00 -18.60 ** 1st contract month for COMEX copper * 3rd contract month for SHFE AL, CU and ZN SHFE ZN began trading on 26/3/07

(Reporting by Julie Crust; editing by Editing by Peter Blackburn)

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Bank of NY suit in Russia adjourned until Nov 27

MOSCOW, Nov 13 (Reuters) - A Russian court postponed the hearing on Thursday of the Russian government's $22.5 billion lawsuit against the Bank of New York Mellon Corp. (BK.N: Quote, Profile, Research, Stock Buzz).

Judge Lyudmila Pulova said that one of the judges on the panel of three had been unable to attend and set the next hearing for Nov. 27.

Since last May, Russia has been seeking compensation from the bank after its former vice-president Lucy Edwards helped illegally transfer $7 billion out of Russia in the late 1990s through Bank of New York accounts.

The bank denies the allegations against it.

(Reporting by Simon Shuster; Editing by Mike Nesbit)

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HK shares fall to two-week low as HSBC, HKEx drop

* Hong Kong shares fall to two-week low

* Chinese banks tumble on earnings outlook

* HSBC drops on uncertainty over U.S. bank bailout plan (Updates to close)

By Jun Ebias

HONG KONG, Nov 13 (Reuters) - Hong Kong shares fell 5.2 percent to a two-week low on Thursday, as HSBC (0005.HK: Quote, Profile, Research, Stock Buzz) dropped on concerns about the U.S. bank bailout plan and HKEx (0388.HK: Quote, Profile, Research, Stock Buzz) tumbled on lower quarterly earnings.

Asia's biggest listed bourse operator, Hong Kong Exchanges & Clearing, tumbled almost 8 percent after it reported that profit fell 43 percent in July-September, its second quarterly decline, due to sluggish trading volumes. [ID:nHKG191448]

BNP Paribas cut its target price on HKEx by 28 percent to HK$49.32 and its earnings forecast by 9 percent for this year and 3-12 percent in 2009 and 2010.

Properties extended their losses on a bleak outlook for the Hong Kong economy, which is expected to have slipped into a recession in the third quarter. Top local developer Sun Hung Kai Properties (0016.HK: Quote, Profile, Research, Stock Buzz) lost 7.1 percent, while Henderson Land (0012.HK: Quote, Profile, Research, Stock Buzz) fell 6.4 percent.

"Even if Hong Kong banks have lowered prime rates, it will not help the property sector. The problem is banks now are more cautious about lending and they need idle cash for emergency," said Daniel Chan, senior investment strategist at DBS Bank.

HSBC tumbled 6 percent amid concern over whether the United States will succeed in its banking rescue plan after the U.S. Treasury backed away from using a $700 billion bailout fund to buy bad mortgage debt from lenders.

A rally in shares of CITIC Pacific (0267.HK: Quote, Profile, Research, Stock Buzz) fizzled, as relief over a bailout by its parent gave way to worries over corporate governance and the outlook for the company's earnings.

The steel-to-property conglomerate rose as much as 17 percent before closing up 9.2 percent after its parent said it would buy $1.5 billion worth of convertible bonds from the firm and assume some of its liabilities which arose from unauthorised foreign exchange contracts. [ID:nHKG221109]

"Investors will still avoid this company because of issues on corporate governance," said DBS's Chan.

The benchmark Hang Seng Index .HSI closed down 717.74 points at 13,221.35, bringing its three day losses to 10.3 percent.

Mainboard turnover rose to HK$51.8 billion ($6.6 billion) from HK$47.2 billion on Wednesday.

The China Enterprise Index .HSCE of top locally listed Chinese companies fell 4.8 percent to 6,795.58, led by a 4.7 percent drop in China Construction Bank (0939.HK: Quote, Profile, Research, Stock Buzz)

Bank of Communications lost 5.4 percent, while bigger rival Bank of China (3988.HK: Quote, Profile, Research, Stock Buzz) gave up 4.6 percent.

"Falling interest rates in China will have a negative impact on bank margins because that would mean lower interest income," said Peter Lai, director at DBS Vickers.

Asia's biggest oil and gas company PetroChina (0857.HK: Quote, Profile, Research, Stock Buzz) fell 6.4 percent after oil prices slid to a 22-month low. [ID:nSYD383548]

Shares of Industrial and Commercial Bank of China (Asia) (0349.HK: Quote, Profile, Research, Stock Buzz) fell 10.5 percent. The bank earlier fell to a five-year low after it said it would make a full provision of HK$600 million for the decline in the value of U.S. dollar and euro denominated bonds issued by three major banks in Iceland amid the global financial turmoil. The bank said the impairment loss will not have a significant impact on its business. (Additional reporting by Donny Kwok; Editing by Jacqueline Wong)

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Nikkei hits 2-wk closing low on grim earnings news

*Nikkei falls 5.3 pct, hits 2-wk closing low

*Grim forecasts from Best Buy, Intel weigh on tech exporters

*Two major glass makers slide after cartel fines (Adds stocks, details)

By Aiko Hayashi

TOKYO, Nov 13 (Reuters) - The Nikkei average slid 5.3 percent to a two-week closing low on Thursday, with high-tech exporters such as Sony Corp (6758.T: Quote, Profile, Research, Stock Buzz) hit by a firmer yen and worries about their earnings prospects after a top U.S. electronics chain issued a profit warning.

Nippon Sheet Glass (5202.T: Quote, Profile, Research, Stock Buzz) and Asahi Glass (5201.T: Quote, Profile, Research, Stock Buzz) tumbled after the European Commission imposed its highest ever cartel penalty on Wednesday, fining them and other companies more than 1.3 billion euros ($1.62 billion). [ID:nT5601]

Mizuho Financial Group (8411.T: Quote, Profile, Research, Stock Buzz) came under pressure after Japan's No.2 bank said it will raise funds to replenish a capital base hit by the global credit crisis and overexposure to domestic stocks. Japanese media said it could seek as much as $3.2 billion. [ID:nT202479]

"In various sectors, earnings prospects for this business year and the next are grim, and the market appears to be in a tug of war between that and the valuation of stocks in the mid to long term," said Junichi Misawa, a senior fund manager at STB Asset Management.

"But as far as share prices go, I don't see a huge crumbling of the supply and demand balance today, compared to times when short-term selling pressure inflated market volatility."

In light trade, the benchmark Nikkei .N225 shed 456.87 points to end at 8,238.64, falling for a third straight day and its lowest close since Oct. 29. The broader Topix .TOPX declined 4.3 percent to 837.53.

The dollar was trading around 95.60 yen after falling below 95.00 yen earlier.

Market analysts said uncertainty about financial measures by the U.S. government also helped weigh on the market.

U.S. Treasury Secretary Henry Paulson said the Treasury's focus now would be on shoring up financial institutions with direct investments, comments that served to underscore the extent of the problems in the U.S. economy. [ID:nN12267400]

CONSUMER ELECTRONICS TUMBLE

Consumer electronics makers tumbled after U.S. chain Best Buy (BBY.N: Quote, Profile, Research, Stock Buzz) slashed its forecast, saying consumers were cutting back on spending amid the deepening economic crisis in one of the biggest destinations for Japanese goods.

The news came on the heels of Circuit City Stores Inc CCTYQ.PK filing for bankruptcy protection.

Sony lost 8.7 percent to 2,000 yen, while Canon Inc (7751.T: Quote, Profile, Research, Stock Buzz) shed 6.3 percent to 2,850 yen and Panasonic Corp (6752.T: Quote, Profile, Research, Stock Buzz) dropped 7.4 percent to 1,382 yen.

Adding to the woes of electronics firms was a shock profit warning from U.S. tech bellwether Intel Corp (INTC.O: Quote, Profile, Research, Stock Buzz), which cut its fourth-quarter revenue forecast by 14 percent and said demand is weak in all market segments and locations. [ID:nN12310791]

Asahi Glass slid 5 percent to 515 yen and Nippon Sheet Glass tumbled 9 percent to 314 yen. An analyst said the fines would have little impact on earnings of the two firms as they had largely allowed for the penalties in their accounts.

Mizuho slid 6.6 percent to 254,500 yen, while top lender Mitsubishi UFJ Financial Group (8306.T: Quote, Profile, Research, Stock Buzz) fell 3.7 percent to 592 yen.

"There are worries about a possible worsening in the near-term supply and demand balance," said Shinichiro Matsushita, an analyst for Daiwa Securities Co Ltd.

"It's a very good thing for the longer term but leads to dilution worries for people concerned about the short term."

In a sign of the pain being felt across Japan's corporate sector, Dentsu Inc (4324.T: Quote, Profile, Research, Stock Buzz), the nation's largest advertising company, lost 7.5 percent to 153,300 yen after it cut its annual profit outlook by 20 percent on Wednesday. [ID:nT164284]

Shares of Asatsu-DK Inc (9747.T: Quote, Profile, Research, Stock Buzz) fell 6.1 percent to 2,220 yen after Japan's third-largest advertising firm more than halved its full-year net profit forecast on Wednesday, hurt along with its rivals by the economic slump. [ID:nT12AD3TB]

After the revision, Credit Suisse cut its rating on the stock to "underperform" from "neutral".

A rare bright spot was Shimizu Corp (1803.T: Quote, Profile, Research, Stock Buzz), one of Japan's largest general contractors. It surged 13.4 percent to 492 yen after Mitsubishi UFJ Securities hiked its rating on the company to "2" from "3" citing long-term growth prospects.

Trade was light on the Tokyo exchange's first section, with 2.19 billion shares changing hands, below last week's daily average of 2.55 billion.

Declining stocks outnumbered advancing ones by more than 5 to 1. ($1=.8022 Euro) (Additional reporting by Masayuki Kitano; Editing by Michael Watson)

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Europe shares rise in choppy early trade; BT jumps

FRANKFURT, Nov 13 (Reuters) - European shares were up in choppy early trade on Thursday, breaking a two-day losing run as BT (BT.L: Quote, Profile, Research, Stock Buzz) jumped after its update and defensive drugmakers rose.

At 0834 GMT, the FTSEurofirst 300 index of top European shares was 0.2 percent higher at 855.22 points, after slipping more than 3.4 percent in the previous session.

The index has lost about 41 percent this year, hit by the credit crisis and resulting economic slowdown.

BT skyrocketed 12.2 percent after it said second-quarter revenues rose. The company announced it will cut its work force by 10,000 people by the end of the current financial year.

The auto sector was also strong, led by Daimler (DAIGn.DE: Quote, Profile, Research, Stock Buzz), up 2.4 percent, and BMW (BMWG.DE: Quote, Profile, Research, Stock Buzz), adding 3.4 percent as the U.S. government weighs an emergency bailout for domestic automakers.

Among drugmakers, Roche (ROG.VX: Quote, Profile, Research, Stock Buzz) gained 1.6 percent and Sanofi-Aventis (SASY.PA: Quote, Profile, Research, Stock Buzz) gained 1.5 percent.

Oils were the biggest weight on shares as crude prices fell 2 percent. Royal Dutch Shell (RDSa.AS: Quote, Profile, Research, Stock Buzz) fell 2.2 percent, BP (BP.L: Quote, Profile, Research, Stock Buzz) slid 1.9 percent.

Banks were also weak, with Royal Bank of Scotland (RBS.L: Quote, Profile, Research, Stock Buzz) down 4 percent, ING (ING.AS: Quote, Profile, Research, Stock Buzz) down 4.1 percent and BNP Paribas (BNPP.PA: Quote, Profile, Research, Stock Buzz) easing 3 percent.

Technology shares fell after chip giant Intel Corp (INTC.O: Quote, Profile, Research, Stock Buzz) cut its fourth-quarter revenue forecast by about 14 percent citing weak demand across the world and in all its products, indicating the economic crisis is set to hurt computer sales in the holiday season and beyond.

Infineon (IFXGn.DE: Quote, Profile, Research, Stock Buzz) was down 2.2 percent.

Mining stocks followed metals prices lower. BHP Billiton (BLT.L: Quote, Profile, Research, Stock Buzz), Anglo American (AAL.L: Quote, Profile, Research, Stock Buzz), Vedanta Resources (VED.L: Quote, Profile, Research, Stock Buzz), Kazakhmys (KAZ.L: Quote, Profile, Research, Stock Buzz), Xstrata (XTA.L: Quote, Profile, Research, Stock Buzz), Antofagasta (ANTO.L: Quote, Profile, Research, Stock Buzz) and Rio Tinto (RIO.L: Quote, Profile, Research, Stock Buzz) fell between 2.4-4.4 percent.

(Additional reporting by Brian Gorman)

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FTSE up 0.1 pct; BT results offset economy woes

* FTSE 100 up 0.1 pct

* BT results, Reed Elsevier update settle investor nerves

* Energy, mining stocks knocked by falling commodity prices

By Simon Falush

LONDON, Nov 13 (Reuters) - Britain's leading share index rose 0.1 percent in early trade Thursday as stronger-than-expected results from BT Group (BT.L: Quote, Profile, Research, Stock Buzz) helped calm investor worries about the state of the global economy.

By 0917 GMT, the FTSE 100 .FTSE had gained 3.44 points to 4,185.46 after falling 1.5 percent on Wednesday.

European shares were relatively resilient after U.S., Asian markets slid amid uncertainty about the U.S. Treasury's banking rescue plan and more signs of stress in the global economy.

BT Group was the blue chip index's biggest gainer, up 10.7 percent after it reported second-quarter earnings just ahead of revised forecasts and said it was in the process of cutting 10,000.

Reed Elsevier (REL.L: Quote, Profile, Research, Stock Buzz) gained 6.5 percent after the professional information provider said it was on track to meet its full-year sales and earnings growth goals.

"The results this morning were reasonable, BT was not as bad as feared... but I think the rally (in these stocks) is untrustworthy and overall it still feels pretty murky," said Paul Kavanagh, director at Stockbroker Killik & Co.

This offset falls in energy stocks as pessimism on the global economy sent oil CLc1 to a 22-month low of $55 a barrel sending heavyweight energy stocks sharply lower.

BP (BP.L: Quote, Profile, Research, Stock Buzz) fell 2.2 percent, Royal Dutch Shell (RDSa.L: Quote, Profile, Research, Stock Buzz) slid 0.8 percent while Cairn Energy (CNE.L: Quote, Profile, Research, Stock Buzz) lost 3.3 percent.

Embattled miners were also on the back foot again as metals prices slid to multi-year lows on worries about the demand outlook.

Silver miner Fresnillo (FRES.L: Quote, Profile, Research, Stock Buzz) was the FTSE 100's top loser, down 9.9 percent, while Lonmin (LMI.L: Quote, Profile, Research, Stock Buzz) fell 0.7 percent and Xstrata (XTA.L: Quote, Profile, Research, Stock Buzz) lost 0.2 percent.

BHP Billiton fell 2.7 percent after it said it had scrapped a study into developing an integrated nickel project in eastern Indonesia. [ID:nSYU005525]

The UK mining index is down 12.9 percent this month and 56 percent this year.

Financial stocks were also among the heaviest losers as worries about the banking sector in the face of the credit crisis continued to weigh.

Japan's Mizuho Financial Group (8411.T: Quote, Profile, Research, Stock Buzz) said it plans to raise fresh capital while Commonwealth Bank of Australia (CBA.AX: Quote, Profile, Research, Stock Buzz) warned it expected a big jump in bad loans.

Barclays (BARC.L: Quote, Profile, Research, Stock Buzz) fell 3.6 percent, HBOS (HBOS.L: Quote, Profile, Research, Stock Buzz) slid 5.3 percent, while Royal Bank of Scotland (RBS.L: Quote, Profile, Research, Stock Buzz) lost 3.9 percent.

Other financial stocks also suffered with London Stock Exchange (LSE.L: Quote, Profile, Research, Stock Buzz) sinking 9.8 percent after it posted a 57 percent rise in operating profit but warned markets would remain difficult.

ICAP (IAP.L: Quote, Profile, Research, Stock Buzz) and Tullet Prebon (TLPR.L: Quote, Profile, Research, Stock Buzz) fell 9.7 and 1.9 percent respectively after Morgan Stanley cut the ratings on both interdealer brokers. (Reporting by Simon Falush; Editing by Hans Peters)

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Germany falls into recession, Japan to boost IMF

A man stands outside a building at a financial district in downtown Tokyo November 13, 2008.
REUTERS/Yuriko Nakao

By Keith Weir and Yoko Nishikawa

LONDON/TOKYO (Reuters) - Germany has fallen into recession and China industry output growth dropped to its lowest in seven years, data showed on Thursday, reinforcing fears the financial crisis is plunging the world into a painful downturn.

Seeking to limit the fallout from a crisis which began when the U.S. housing market collapsed, Japan said it would offer up to $100 billion to the International Monetary Fund (IMF) for emerging economies.

The impact of the worst financial conditions in 80 years was felt sharply in Germany, Europe's largest economy, where the economy contracted by 0.5 percent in the third quarter, putting it in recession for the first time in five years.

The decline was accentuated by a negative contribution from foreign trade as exports weakened.

"The headwinds of the financial crisis and the global economic slowdown are blowing right in the face of the German economy," said Carsten Brzeski of ING Financial Markets.

"Even more worrying, the full impact of the financial crisis still has to unfold," he said. "If you think today's numbers are already bad, just wait for the next quarter."

China, which has unveiled a 4 trillion yuan ($586 billion) stimulus package, also felt the ill effects of a global slowdown, with annual industrial output growth slumping to 8.2 percent in October, its weakest showing since October 2001.

Stock markets tumbled in Asia and Europe, spooked by worries that massive capital injections and emergency regulatory measures have failed to halt damage to the real economy.

Following a Wall Street sell-off that sent the Nasdaq to a 5-year low, Tokyo shares slid 5.3 percent and the price of oil fell to a 22-month low at $55 a barrel on worries that a recession will curb demand.

China was a rare bright spot, shares ending up 3.7 percent on hopes that the stimulus package would include big spending on housing and railway construction.

Shares in Europe fell 0.5 percent in early trade.

In a bid to bolster stocks, Australia moved to impose a permanent ban on so-called naked short-selling, the practice whereby hedge funds sell shares they neither own nor have borrowed in the hope of quickly buying them back at a discount.

G20 SUMMIT

Governments around the world have pledged around $4.6 trillion for bank bailouts, credit guarantees and fiscal spending to contain the damage from the financial turmoil.

Leaders of the G20 industrialised and emerging nations will gather in Washington on Friday to decide on the next steps in tackling the crisis.

Japan is prepared to offer foreign reserves worth up to $100 billion to the IMF if the Washington-based lender needs extra funds to help emerging economies, a government source said on Thursday.

Prime Minister Taro Aso will make the proposal at the G20 summit, the source told Reuters.

"Investors are now looking to the G20 Summit this weekend, with hopes of some further policy action," Patrick Bennett, Asia FX and rates strategist at Societe Generale, wrote in a note.

However, the summit falls at an awkward time politically as U.S. President George W.Bush prepares to leave office.

Bush plans to call for fixing the problems rather than dismantling the existing system, the White House said.

Bush will travel to Wall Street on Thursday to outline his views on the financial markets.

"We should fix the problems we have rather than dismantle a system that has improved the lives of hundreds of millions of people around the world," White House spokesman Carlton Carroll said in previewing Bush's remarks.

Some leaders have called for big reforms to the financial system, but the Bush administration has been more cautious.

The president will "emphasize that free market capitalism -- especially free trade -- is still the best system to create economic growth and lift people out of poverty," Carroll said.

Washington has backed away from using a $700 billion bailout fund to cleanse bank balance sheets of bad mortgage debt.

U.S. Treasury Secretary Henry Paulson said he preferred instead to focus on buying stakes in banks to encourage them to increase lending.

(Additional reporting by Reuters bureaux worldwide; Editing by Mike Peacock)

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Asian shares hit as grim news abounds

A man uses his mobile phone in front of an electronic board showing stock information at a brokerage house in Wuhan, Hubei province November 5, 2008.

REUTERS/Stringer

By Rafael Nam

HONG KONG (Reuters) - Asian shares fell on Thursday to their lowest this month on uncertainty about the U.S. Treasury's banking rescue plan and signs the global financial crisis biting deeper in Asia.

Japan's Mizuho Financial Group (8411.T: Quote, Profile, Research, Stock Buzz) said it plans to raise fresh capital, while Commonwealth Bank of Australia (CBA.AX: Quote, Profile, Research, Stock Buzz) warned it expected a big jump in bad loans.

The announcements came on a bleak day that also included data showing China's industrial output slumped to a seven-year low, and follows a revenue warning from Intel Corp (INTC.O: Quote, Profile, Research, Stock Buzz) and a dismal forecast from U.S. electronics retailer Best Buy (BBY.N: Quote, Profile, Research, Stock Buzz).

European shares were set to tumble as well, with Britain's FTSE 100 .FTSE seen down as much as 2.2 percent.

Deepening gloom about the global economy led crude prices to hit a 22-month low of $55 a barrel. Metals such as platinum also dropped.

The Japanese yen retreated against the euro and the dollar after soaring on Wednesday on a flight-to-quality. Other Asian currencies fell, while Australia's central bank stepped in to support its tumbling Australian dollar.

"There isn't a lot of light right now," said Hiroaki Osakabe, a fund manager at Chibagin Asset Management in Japan.

"With so many grim forecasts and the situation in developing nations growing worse, things are tough."

BAILOUT UNCERTAINTY

The MSCI index of Asian stocks outside Japan .MIAPJ0000PUS dropped 5.4 percent as of 0620 GMT after at one point hitting its lowest level since October 30.

Asian shares followed Wall Street lower after the U.S. Treasury on Wednesday backed away from using a $700 billion bailout fund to buy bad mortgage debt from lenders to focus instead on buying stakes in the U.S. banks themselves.

The shift in focus not only created uncertainty, but came after a raft of recent gloomy economic data worldwide.

Data showed China's industrial output slumped to a seven-year low last month as manufacturers throttled back production in response to weakness in the domestic property market and an unfolding slowdown in export demand.

Intel Corp (INTC.O: Quote, Profile, Research, Stock Buzz) also cut its fourth-quarter revenue forecast, citing weak demand across the world for all its products, while Best Buy slashed its profit forecast.

Japan's Nikkei average .N225 dropped 5.3 percent. Other markets also took a beating: South Korea .KS11, Hong Kong .HSI, and Singapore .FTSTI fell 3-6 percent each and Australia sank 5.9 percent to a four-year low.

But Shanghai .SSEC surged 4.3 percent on hopes for a major boost to the economy from fiscal spending and monetary easing.

AUSSIE, RUPIAH SLUMP

The yen retreated from a two-week high against the euro as short-term players locked in profits, though it still retained its overall strength as investors remain wary of riskier assets.

The euro rebounded to 119.20 yen on trading platform EBS, up 0.3 percent from late U.S. trade, after briefly falling as low as 117.65 yen, the lowest since October 28.

The dollar recovered from the day's low of 94.53 yen to 95.54 yen, up 0.5 percent on the day.

Other currencies fared worse. The battered Australian dollar remained on the defensive at $0.6391, after the central bank said it had intervened to support it.

The Indonesian rupiah fell almost 4 percent to hit 11,950 per dollar, its weakest since April 2001, following new government restrictions on foreign exchange purchases.

OIL SLUMPS

Commodity prices crumbled further on concern sputtering economic growth would curb demand for everything from oil to grain and on widespread risk aversion.

U.S. crude futures fell for a third consecutive day, down $1.03 to $55.13, after earlier falling to $55.03 -- the lowest since January 30, 2007.

"Oil prices continue to be pressured by fears that weaker international economic growth will depress oil consumption," said David Moore, an analyst at the Commonwealth Bank of Australia.

Platinum fell as low as a bid of $789.50 but rebounded to $794.00 later in the day, still well below the New York notional close of $810.

But regional government bonds gained from the volatility elsewhere, with Japan's December 10-year JGB futures up 0.42 point to 138.51, after climbing as high as 138.79.

In U.S. Treasuries, the spread between the two-year and the 10-year yields was at around 257 basis points, approaching the 2003 peak of 266 basis points amid the possibility of Japanese and Chinese reserves of Treasuries will be sold to raise cash.

The two-year note was unchanged in price from late New York trade to yield 1.163 percent after hitting 1.145 percent, a five-year low.

The benchmark 10-year note dipped 2/32 in price to yield 3.740 percent from around 3.66 percent.

(Additional reporting by Elaine Lies in TOKYO and Fayen Wong in PERTH; Editing by Lincoln Feast)

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Citi directors looking to replace chairman: report

A Citibank sign is seen on the side of a branch in New York, October 8, 2008.
REUTERS/Lucas Jackson

(Reuters) - Some directors on the Citigroup Inc board are considering a move to replace chairman Win Bischoff as they are dissatisfied with the company's performance, the Wall Street Journal said, citing people familiar with the matter.

It wasn't clear how many of Citigroup's directors were advocating a change, and it was possible the board would opt to stick with its current chairman, the paper said.

"I'm not sure it will happen, but it seems likely" that Bischoff will be replaced, the paper quoted one person familiar with the situation.

However, the paper quoted a Citigroup spokeswoman as saying: "Any report that the board is searching for a new chairman is false."

One leading candidate is Richard Parsons, Time Warner Inc chairman and a member of Citigroup's board, the paper said.

The possible chairman switch, still in the discussion phase, reflects a rising sentiment among some Citigroup directors that they'd prefer to have an outsider running the board, the paper said, citing people with knowledge about the matter.

One potential wild card is whether President-elect Barack Obama would ask Parsons, part of Obama's transition economic advisory board, to take a prominent role in his cabinet, the paper said.

The discussion of replacing Bischoff comes as the New York-based company's board is adopting an increasingly assertive stance toward overseeing chief executive officer Vikram Pandit and his team of executives, the paper said.

It said some directors have grown concerned Bischoff hasn't been exercising adequate oversight.

Housing and credit market turmoil has forced Citigroup to post its fourth straight quarterly loss, reflecting billions of dollars in write-downs and credit losses.

Parsons, Citigroup's lead outside director, recently has involved himself more heavily in monitoring its internal operations, according to people familiar with the matter, the paper said.

It said Parsons has been summoning top executives throughout the company to gauge their opinions on its operations, and then briefing his fellow directors on the conversations.

Parsons was meeting or talking by phone with executives several times a week and some have been complaining to him, the paper said.

Citigroup could not be immediately reached for comment by Reuters.

(Reporting by Supantha Mukherjee in Bangalore; Editing by Jerry Norton)

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Euro Stages A Comeback Despite Horrid German GDP

Daily Forex Fundamentals | Written by GFT | Nov 13 08 10:17 GMT |

Top Stories German GDP shocks to the downside, but EUR/USD bounces back to 1.2500 Japanese FinMin Nakagawa - Rapid FX moves undesirable USD/JPY holds 9500 Chinese Industrial Output tumbles to 8% vs. 11% forecast Mizuho may seek capital from insurers BT to cut 10000 jobs Russia, Kuwait suspend stock trading as Russian retail pulls bank deposits Oil sinks to $55/bbl Gold drips to $710/oz Overnight Eco NZD Business Manufacturing Index 43.5 vs. 46.7 last NZD Retail Sales -0.5% vs. 0.4% forecast JPY CPGI 4.8% vs. 5.5% AUD M1 Inflation Expectations 3.3% EUR German Preliminary GDP -0.5% sharply lower vs. -0.2% EUR French CPI -0.1% as expected CHF PPI -0.6% vs. -0.5% eyed CHF ZEW Economic Expectations -88.5 vs. -88 Event Risk on Tap CAD Trade Balance market looks at 5.1B print USD Trade Balance -56.5B expected vs. 59.1B last USD Unemployment Claims 483K eyed Price Action USD/JPY rallies all the way to 9600 after hitting 9450 in Asia trade as bounce in equities and support at 9500 helps AUD/USD sold hard to 6350 on early risk aversion flows but bounces to 6450 in early Europe GBP/USD tries to makea run back to 1.5000 after crashing to 1.4800 in early Asia EUR/USD makes a massive recovery off 1.2390 lows to retake 1.2500 in early Europe Euro Stages A Comeback Despite Horrid German GDP Yesterday we noted that, 'another triple digit slaughter in equities could easily drag the pair towards the 1.2400 handle for a retest of its recent lows.' In today's late Asian trade that scenario played out to a tee as the EUR/USD was beaten down by risk aversion flows and a much worse than expected German GDP data which printed at -0.5% versus -0.2% forecast. The horrid GDP numbers confirmed the fact that EZ's largest economy has now tumbled into the worst recession in 12 years hampered by slowing export demand from abroad and a retrenching consumer at home.Today's news nearly guarantees another 50bp cut from the ECB in December as price stability now takes a distant back seat to growth in terms of primary policy objectives of European monetary officials. However, despite the dour news, the EUR/USD staged a massive comeback rally in morning European trade retaking the 1.2500 figure after plumbing the lows at 1.2390 only an hour earlier. The sharp gains were attributed partly to large buyer from Germany who bought 2 Billion from the lows. Thus, the price action suggests that 1.2500 has become a key battleground in the pair and at least in the near term even in the light of worsening economic data, that level could act as support. We have been arguing for weeks that range conditions are the most likely outcome for the currency market until the year end, and for now the price action appears to confirm that thesis. The single greatest danger to any EUR/USD long position however, continues to be stocks. If equities accelerate their decline into North American open, all bets will be off and euro could print new lows, opening up the possibility of a further downside test to 1.2000. But any bounce in DJIA today would very likely extend the recovery envelope to 1.2600 and would almost certainly pull the pound above 1.5000 handles as late shorts scramble to cover. FX Upcoming Currency GMT EST Release Expected Prior CAD 13:30 8:30 CAD Trade Balance 5.3B 5.8B USD 13:30 8:30 USD Trade Balance -56.5B -59.1B USD 13:30 8:30 USD Unemployment Claims 483K 481K Boris Schlossberg http://www.gftforex.com DISCLAIMER: GFT refers to Global Futures & Forex, Ltd. and all of its divisions, branches and subsidiaries, including Global Forex Trading and GFT Global Markets UK Limited. GFT Global Markets UK Limited is authorized and regulated by the United Kingdom Financial Services Authority. Each investment product is offered only to and from jurisdictions where solicitation and sale are lawful. Trading of foreign exchange contracts, contracts for differences, derivatives and other investment products which are leveraged, can carry a high level of risk, and may not be suitable for all investors. It is possible to lose more than the initial investment. In Australia, GFT means Global Futures & Forex, Ltd. ARBN 103 508 461, AFS Licence 226625. A Product Disclosure Statement (PDS) is available at www.gft.com.au. You should read and consider the PDS before making any decision to deal in GFT products. © 2008 Global Futures & Forex, Ltd. All rights reserved.

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