Pound Rises Against Dollar After Bank of England Rate Comments

By Lukanyo Mnyanda

Nov. 19 (Bloomberg) -- The pound rose against the dollar and the euro as the Bank of England indicated it’s prepared again to cut interest rates, now at the lowest level since 1955, to revive the economy.

“There’s a sense they’re ready to be more aggressive in addressing the economic problems, and the market appears to be taking that as a positive step,” said Russell Jones, head of global fixed-income and currency research in London at RBC Capital Markets. “It remains uncertain whether this will be sustained. There’re a lot of problems to be worked out.”

Bank of England policy makers, led by Governor Mervyn King, considered a bigger reduction in the benchmark interest rate than the 1.5 percentage points announced Nov. 6, according to the minutes of their meeting preceding that decision.

The pound was at $1.5053 as of 11:30 a.m. in London, from $1.4958 yesterday. The U.K. currency is down 24 percent against the dollar this year. Against the euro, it climbed to 83.81 pence, from 84.35 pence, reducing its decline this year to 13 percent. It reached a record low of 86.63 pence last week. Investors should use gains by the pound as an opportunity to sell the currency, Jones said, without providing a forecast.

The Bank of England discussed the need for a reduction to less than 2.5 percent, before the monetary policy committee voted 9-0 to lower the rate to 3 percent, according to the minutes, released today.

Policy makers limited the reduction to 1.5 percentage points because they wanted to wait for details of government tax plans and see the effects of the state rescue of financial institutions.

The European Central Bank, headed by Jean-Claude Trichet, cut its main rate half a point to 3.25 percent this month, pushing it below the Bank of England’s for the first time since the euro’s debut in 1999.

“Most of the bad news has already come out and the currency should consolidate,” said Roberto Mialich, a Milan- based currency strategist at Unicredit Markets & Investment Banking. “The dovish inflation outlook has prompted the markets to price in more aggressive rate cuts from the Bank of England.”

The implied yield on the short-sterling December futures contract fell 6 basis points to 3.39 percent today, pushing its decline since Oct. 31 to 82 basis points. The equivalent rate in euros was 3.48 percent, a drop of 19 basis points this month.

U.K. government bonds rose, with the yield on the two-year note dropping five basis points to 2.05 percent. The 4.75 percent security due June 2010 advanced 0.07, or 70 pence per 1,000 pound face amount, to 104.09. The 10-year yield slipped five basis points to 4.03 percent. Yields move inversely to bond prices.

The difference in yield between the two-year and the 10- year gilt was 198 basis points, near the widest since 1993. The spread was 179 basis points a week ago. Investors are favoring shorter-dated notes, which are more sensitive to the outlook for interest rates, on speculation the Bank of England will keep cutting the benchmark rate.

To contact the reporter on this story: Lukanyo Mnyanda in London at lmnyanda@bloomberg.net

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Latin America Currencies: Chilean Peso Drops on Copper's Slide

By Drew Benson

Nov. 19 (Bloomberg) -- Chile's peso declined for a third day as the price of copper fell on concern that the global economic slowdown will decrease demand for the base metal.

The Chilean currency fell 1.1 percent to 655.02 per dollar at 9:13 a.m. in New York, from 647.80 yesterday. The peso touched 658.15 per dollar, its lowest since Nov. 3.

``The peso's slide has to do with the increase in global uncertainty, but there are also domestic factors that are putting pressure on the peso'' to decline, said Miguel Cardoso, the head of economic research at BBVA Chile in Santiago. Among these, export revenue from copper is declining, while falling imports of durable consumer goods indicate the local economy is cooling rapidly, he said.

``This makes it more probable that the central bank will have to lower rates rapidly in early 2009 and that is already being reflected in yields at the longer end of the curve,'' Cardoso said.

The South American nation is the world's top supplier of copper.

The yield on a basket of five-year Chilean peso bonds in inflation-linked currency units was unchanged at 3.3 percent, according to Bloomberg composite prices.

In Argentina, the peso slid for a sixth day, dropping 0.2 percent to 3.3263 per dollar, from 3.3207 yesterday.

The yield on Argentina's inflation-linked peso bonds due in December 2033 rose 4 basis points, or 0.04 percentage point, to 23.876 percent, according to Citigroup Inc.'s local unit.

To contact the reporter on this story: Drew Benson in Buenos Aires at abenson9@bloomberg.net

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Canada's Currency Depreciates as Stocks and Commodities Drop

By Chris Fournier

Nov. 19 (Bloomberg) -- Canada's currency weakened for a second day as global stocks fell, indicating investors are risk- averse and diminishing the outlook for commodities including oil.

``Equity markets still look extremely vulnerable at this point,'' said Ian Stannard, a senior currency strategist in London at BNP Paribas SA. ``Oil prices are continuing to move lower. This is all going to be unhelpful for the Canadian dollar.'' Stannard forecasts the currency will weaken to C$1.30 by year-end.

The Canadian dollar depreciated as much as 0.6 percent to C$1.2388 per U.S. dollar, from C$1.2312 yesterday. It traded at C$1.2321 at 7:44 a.m. in Toronto. One Canadian dollar buys 81.17 U.S. cents.

The MSCI World Index, a gauge of stocks in 23 developed nations, fell 0.6 percent to 856.09.

Crude oil, which accounts for a tenth of Canada's export revenue, fell for a fourth day to as low as $53.30 a barrel.

Bank of Canada Governor Mark Carney will speak at the U.K. Chamber of Commerce in London. His remarks will be posted on the bank's Web site at 8:20 a.m. New York time.

Statistics Canada will release data on international securities transactions and its index of leading indicators at 8:30 a.m. in Ottawa.

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

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Yen Rises on Speculation Drop in Stocks Will Sap Carry Trades

By Ye Xie and Andrew Macaskill

Nov. 19 (Bloomberg) -- The yen advanced against the dollar as traders speculated that a global drop in stocks will prompt investors to sell higher-yielding assets and pay back low-cost loans in Japan's currency.

Japan's yen also gained against the Australian dollar and the South Africa rand on bets the deepening global economic slump will discourage carry trades. The pound rose against the dollar and the euro as minutes of the Bank of England meeting this month indicated policy makers are prepared to cut interest rates again to revive the economy.

``The currency market just swings around equities,'' said Tom Fitzpatrick, global head of currency strategy at Citigroup Global Markets Inc. in New York. ``If equities can't hang in there, the yen will gain.''

The yen rose 0.1 percent to 96.90 against the dollar at 8:35 a.m. in New York, from 97.03 yesterday. Japan's currency traded at 122.53 per euro, compared with 122.43. The euro rose 0.2 percent to $1.2646, from $1.2618. The pound increased 0.5 percent to $1.5036 from $1.4958.

Japan's currency increased 0.9 percent to 62.74 against the Australian dollar and 2.4 percent to 9.26 versus the rand on speculation investors will unwind trades in which they get funds in a country with low borrowing costs and buy assets where returns are higher. Japan's 0.3 percent target lending rate compares with 3.25 percent in Europe, 5.25 percent in Australia and 12 percent in South Africa.

Drop in Stocks

Europe's Dow Jones Stoxx 600 Index declined 1.6 percent, while Standard & Poor's 500 Index futures lost 1.2 percent.

The yen has advanced 14 percent versus the dollar, 33 percent against the euro and 53 percent against the Australian dollar in the past three months as the global economy headed toward a recession.

Nissan Motor Co., Japan's third-largest automaker, told the Wall Street Journal that profit in the second half will go to ``zero'' because of lower sales in the U.S. and a stronger yen.

``I would recommend a continuation pattern of buying the yen,'' said David Bloom, the London-based global head of currency strategy at HSBC Plc, Europe's biggest bank by market value. ``Don't throw your coin in the well and wait around listening for the bottom of the market. This financial crisis is not over.''

The U.S. should reduce its trade and budget deficits to support the dollar because it's the world's reserve currency, Japan's Vice Finance Minister for International Affairs Naoyuki Shinohara said today in a speech in Sydney.

A $700 billion U.S. financial stability package isn't intended to prevent General Motors Corp., Ford Motor Co. and Chrysler LLC from collapsing, Treasury Secretary Henry Paulson said at a House of Representatives hearing yesterday.

GM on Economy

The U.S. economy would suffer a ``catastrophic collapse'' if domestic carmakers fail, GM Chief Executive Rick Wagoner told a Senate panel yesterday. Three million jobs would be lost within the first year, and government tax losses would total $156 billion over three years, Wagoner told a Senate panel.

Housing starts in the U.S. dropped to an annual rate of 791,000 in October from 828,000 in the previous month, the Commerce Department reported. The median forecast of 75 economists surveyed by Bloomberg News was for a drop to 780,000 from a previously reported 817,000.

U.S. consumer prices fell 1 percent last month after being unchanged in September, the Labor Department reported. The Fed will release at 2 p.m. New York time minutes of its meeting on Oct. 29, when policy makers cut the fed funds target by a half- percentage point to 1 percent.

Bank of England policy makers considered an even bigger reduction in the benchmark interest rate than the 1.5- percentage-point cut announced on Nov. 6 as their forecasts pointed to a deepening recession.

The possible need for a cut to less than 2.5 percent was discussed at the Monetary Policy Committee's meeting, according to minutes published today by the central bank in London. Governor Mervyn King and his colleagues voted 9-0 to lower the rate to 3 percent from 4.5 percent.

To contact the reporters on this story: Ye Xie in New York at yxie6@bloomberg.net; Andrew Macaskill in London at amacaskill@bloomberg.net

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Weatherly Says It Will Close Two Copper Mines, Cut 100 Jobs

By Brett Foley

Nov. 19 (Bloomberg) -- Weatherly International Plc, a U.K. copper producer operating in Namibia, said it will close two mines and cut 100 jobs after prices dropped.

The company will close the Tsumeb West and Matchless mines and make 100 workers redundant at its Otjihase and Tschudi mines, London-based Weatherly said in a statement distributed today by the Regulatory News Service.

``This is expected to result in a significant reduction in costs with only a small reduction in overall output,'' the company said. One-off costs associated with closing the mines will be about $2 million, half of which has already been incurred.

To contact the reporter on this story: Brett Foley in London at bfoley8@bloomberg.net

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Cocoa Posts Longest Winning Streak in Nine Months on Deliveries

By Marianne Stigset

Nov. 19 (Bloomberg) -- Cocoa rose in London, recording the longest winning streak in nine months, after reports deliveries have declined in Ivory Coast, the world's biggest grower.

Cocoa prices are up 41 percent this year, even after falling for the past two months, compared with a 29 percent slump in the UBS Bloomberg CMCI Index of 26 commodities. Arrivals of the beans at ports in Ivory Coast fell 54 percent between Oct. 1 and Nov. 16, Reuters reported this week, citing unidentified exporters.

``Soft and tropical commodities such as cocoa and grains will be the first to get out of the downward trend,'' said Eugen Weinberg, a Commerzbank AG analyst in Frankfurt. ``People will still be eating chocolate and grains even in a recession.''

Cocoa for December delivery rose 1 pound, or 0.1 percent, to 1,469 pounds ($2,212) a metric ton by 11:20 a.m. on the Liffe exchange in London, the ninth straight day of gains. Futures for March delivery rose $14, or 0.7 percent, to $2,060 a ton on ICE Futures U.S. in New York.

``There seems to still be an element of caution with regards to the problems in Ivory Coast,'' Ryan Bennett, a cocoa trader at Sucden (U.K.) Ltd. wrote in a report today.

Hedge-fund managers and other large speculators increased net-long positions in New York cocoa futures in the week ended Nov. 11, according to U.S. Commodity Futures Trading Commission data. Speculative long positions, or bets prices will rise, outnumbered short positions by 5,854 contracts on ICE Futures U.S., formerly known as the New York Board of Trade.

Chocolate Demand

Chocolate demand has held up in previous slowdowns, Patrick de Maeseneire, chief executive officer at Barry Callebaut AG, the world's largest bulk-chocolate maker, said earlier this month.

Steady demand for candy helped Cadbury Plc, the U.K. maker of Green & Black's organic chocolate bars, to maintain its annual sales and profitability goals last month.

Global cocoa production will outpace demand by 52,000 tons in the 2008-09 season, according to Fortis. The bank on Oct. 31 reduced its estimate for grindings in the period to 3.71 million

Among other agricultural commodities, white sugar for March delivery fell 90 cents, or 0.3 percent, to $324.30 a ton. Robusta coffee for January delivery fell $9 to $1,810 a ton.

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

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Tin Declines to Three-Week Low in London as Stockpiles Expand

By Claudia Carpenter

Nov. 19 (Bloomberg) -- Tin fell to a three-week low in London as expanding stockpiles signaled production is outpacing demand. Copper, nickel and aluminum also dropped.

Tin stockpiles in warehouses monitored by the London Metal Exchange have jumped 27 percent since Nov. 10. The global supply deficit will narrow next year as production climbs the most in four years and demand stabilizes, according to Barclays Capital.

``Electronics demand, as well as cars, is down,'' said Eugen Weinberg, an analyst at Commerzbank AG in Frankfurt.

Tin for delivery in three months declined $700, or 5.4 percent, to $12,350 a metric ton as of 10:40 p.m. on the London Metal Exchange. Prices have dropped 25 percent this year. The contract earlier reached $12,000, the lowest since Oct. 27.

Production will jump 3.4 percent next year while demand gains 0.2 percent, Barclays said. Supply will fall short of demand by 10,000 tons after a deficit of 17,000 tons this year.

Tin demand outpaced supply by 3,500 tons in the first nine months of the year, the World Bureau of Metal Statistics said in a report today. Consumption dropped 3.4 percent to 254,700 tons.

Aluminum for delivery in three months fell $32, or 1.7 percent, to $1,885 a ton and copper declined $134, or 3.6 percent, to $3,616 a ton. Aluminum stockpiles tracked by the London Metal Exchange climbed 5.1 percent, the biggest gain since Sept. 17, close to a 14-year high of 1.7 million tons.

Lead Declines

``Last time that LME three-month aluminum prices sustained levels below $1,800 per ton was in the May-July 2005 period,'' Texas-based researcher Harbor Intelligence said in a report. ``Back then oil, alumina spot, U.S. dollar, aluminum inventories, and global premiums were pretty much around today's levels. There are fundamental conditions for today's prices to extend their losses and fall toward $1,800-1,700 per ton.''

Lead dropped $30, or 2.3 percent, to $1,270 a ton, zinc fell $41, or 3.3 percent, to $1,188 a ton and nickel fell $300, or 2.8 percent, to $10,450 a ton.

Aluminum, copper and nickel supply outpaced demand in the first nine months of the year, while lead and zinc recorded deficits, the World Bureau of Metal Statistics said.

Metal supplies will be ``tighter then ever'' as a deepening financial crisis constrains development of new mines and pushes prices lower, Alan Heap, a commodity analyst at Citigroup Inc., said at the Australia Mining Congress in Sydney today.

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

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Oil Falls to 22-Month Low on Forecast U.S. Stockpiles Expanded

By Christian Schmollinger and Grant Smith

Nov. 19 (Bloomberg) -- Crude oil fell for a fourth day, dropping below $54 to its lowest in 22 months, on expectations U.S. inventories gained last week as fuel demand in the world’s largest user declined.

Stockpiles probably climbed 1 million barrels last week while refinery output is likely to have fallen for a third week, according to the median of analyst estimates before an Energy Department report today. BASF SE, the world’s largest chemical company, said it will temporarily shutter about 80 factories because of a “massive decline” in demand.

“We see nearly every day now some downward revision in global demand,” said Hannes Loacker, an analyst at Raiffeisen Zentralbank Oesterreich in Vienna. “If we see really bad inventory data today, we can go to $45 in one day.”

Crude oil for December delivery fell as much as $1.09, or 2 percent, to $53.30 a barrel in electronic trading on the New York Mercantile Exchange. That’s the lowest since Jan. 23, 2007. It traded at $53.71 a barrel at 1:18 p.m. London time.

The December future expires tomorrow. The more active January contract was down 86 cents at $52.83 a barrel.

Oil has dropped 63 percent since reaching a record $147.27 in July. Futures fell 56 cents, or 1 percent, to $54.39 a barrel yesterday, the lowest settlement since Jan. 29, 2007.

U.S. gasoline purchases fell for a 30th consecutive week, MasterCard Inc. said yesterday. Purchases of gasoline in the U.S. fell 2.8 percent last week, MasterCard Inc. said in its weekly SpendingPulse statement.

China Slowdown

China’s economy may grow by less than 9 percent in the fourth quarter of this year as overseas demand weakens, the China Securities Journal reported, citing People’s Bank of China adviser Fan Gang.

The Asian nation’s economic expansion may slip to below 8 percent next year before rebounding to between 8 and 9 percent in 2010, the Xinhua News Agency-affiliated newspaper said today, citing Fan’s interview. The country is the world’s second- biggest oil consumer.

Most Asian stocks fell today, led by commodity producers as oil and metals prices dropped. Woodside Petroleum Ltd., Australia’s second-largest oil company, lost as much as 6.3 percent. Cnooc Ltd., China’s biggest offshore explorer, fell 1.8 percent to HK$5.60.

U.S. Stockpiles

Refineries probably operated at 84.5 percent of capacity, down 0.1 percentage point from the week before, the survey of 12 analysts showed. The plants used 87 percent of their capacity a year ago as they raised their output to produce heating fuels.

“Seasonally it is a time where demand for heating oil starts to pick up,” said Toby Hassall, a research analyst with Commodity Warrants Australia in Sydney. “But offsetting that is the economic slowdown which should mute any seasonal support.”

Analysts were split over whether gasoline stockpiles rose or fell last week. Supplies were probably unchanged from 198.1 million barrels the week before, according to the survey.

Supplies of distillate fuel, a category that includes heating oil and diesel, rose 600,000 barrels from 128.4 million barrels the week before, according to the survey.

The Energy Department is scheduled to release its weekly report today at 10:35 a.m. in Washington.

Brent crude oil for January settlement was at $51.34 a barrel, down 50 cents, on London’s ICE Futures Europe exchange at 1:11 p.m. in London. The contract declined yesterday 47 cents, or 0.9 percent, to $51.84 a barrel, the lowest settlement since Jan. 18, 2007.

To contact the reporter on this story: Christian Schmollinger in Singapore at christian.s@bloomberg.net.

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Gold Demand Rose 18% in Quarter as Price Lured Buyers, WGC Says

By Nicholas Larkin and Pham-Duy Nguyen

Nov. 19 (Bloomberg) -- Gold demand rose 18 percent in the third quarter as lower prices encouraged purchases by jewelers and as investors sought a haven from the credit crisis, the World Gold Council said.

``We live in pretty difficult times and that's being reflected in the world of gold,'' George Milling-Stanley, a director at the London-based industry group, said in an interview. ``More and more investors are seeing the long-term strategic benefits gold can have.''

Global demand rose to 1,133.4 metric tons from 963.3 tons a year earlier, the council said today in a statement. So-called identifiable investment, which includes purchases through exchange-traded funds and of bars and coins, climbed 56 percent to 382.1 tons during the quarter. Jewelry demand gained 7.6 percent and sales to India, the world's largest gold consumer and jewelry buyer, advanced 29 percent.

Lehman Brothers Holdings Inc.'s bankruptcy filing in September, which triggered a $700 billion U.S. government bank- bailout package, spurred a record 150 tons of gold inflows into ETFs, the council said. ETF gold additions increased 7.5 percent from the second quarter and 31 percent from a year earlier.

``Gold is kind of an insurance policy for your portfolio,'' Milling-Stanley said. ``It's the asset of last resort.''

Bullion averaged $870.93 an ounce in the three months through September, compared with $897.69 the previous quarter, and traded at $737.60 an ounce at 11 a.m. in London today. The metal has lost 29 percent since reaching a record $1,032.70 an ounce in March as investors liquidated their commodity holdings to raise cash.

`Back Into Gold'

``There was good deal of selling out of commodity indices,'' Milling-Stanley said. ``That's why we saw a downturn in the price of gold even though demand grew. A lot of investors will go back into gold once they have the money to do so.''

The S&P GSCI Index of 24 raw materials slid 28 percent in the quarter, compared with a 5.9 percent decrease in gold prices.

Demand from India rose to 249.5 tons from 190.8 tons, the council said. The country accounted for 27 percent of gold demand in 2007. Indian purchases of the metal traditionally recover in the second half, spurred by the wedding season and Diwali, the festival of lights.

Demand increased by 15 percent in the Middle East and by 18 percent in China.

``If the price remains volatile, that's going to act as a check on any jewelry growth,'' Milling-Stanley said. ``Investment demand is going to continue to lead the way in any consumption that we're going to see.''

`Phenomenal Change'

BullionVault, which allows customers to buy and sell physical gold held in secure vaults in Zurich, London and New York, last week said funded customer accounts almost tripled in the year through October.

``We have seen a phenomenal change in the demand for physical gold ownership,'' said Adrian Ash, head of research at the online service for private investors. ``If people want to get money to safety, it's a natural instinct.''

Gold supply fell 9.7 percent to 858 tons, the council said. Central bank sales plunged 87 percent to 23 tons. Banks covered by the Central Bank Gold Agreement sold 357 tons of gold through September this year, the lowest since 1999.

That year, several central banks signed a five-year accord limiting gold sales to help stabilize the market. A second agreement, which runs to Sept. 26, 2009, permitted a quota of 500 tons a year.

``You may find that some of those central banks are done with the selling,'' Milling-Stanley said.

To contact the reporters on this story: Nicholas Larkin in London at nlarkin1@bloomberg.net; Pham-Duy Nguyen in Seattle at pnguyen@bloomberg.net.

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Analysts Cut Estimates for Almost Half of Stocks, JPMorgan Says

By Alexis Xydias

Nov. 19 (Bloomberg) -- Analysts have cut profit estimates for 48 percent of stocks they cover worldwide, the most in at least 15 years, and more downgrades are likely as the economy slows, JPMorgan Chase & Co. said.

Predictions of next year's earnings were reduced for 60 percent of U.S. stocks in the four weeks through Nov. 11, according to a report by JPMorgan quantitative analysts in London. In Europe, 44 percent were downgraded, the study, which covers data since 1993, said. Some 11 percent of global profit estimates were raised in the period.

Investors preceded the downgrades by dumping equities this year as analysts appeared late in assessing the effect of the global recession on company earnings. The MSCI World Index tumbled 19 percent in October, its worst monthly performance ever, following a 12 percent decline in September.

``While analysts seem to have finally cut their expectations sharply they are still not in line with the pessimistic investors' expectations,'' Marco Dion, who led the research, said in the report dated yesterday. ``Given the current economic landscape there is however very little reason to imagine many stocks will be receiving upgrades.''

Companies from chipmaker Intel Corp. and J.C. Penney Co., the third-largest U.S. department-store company, to Swiss Life Holding, Switzerland's biggest life insurer, have scrapped their own forecasts or indicated the credit-market crisis has filtered through to the wider economy and is hurting sales.

U.S. companies reporting earnings this quarter have missed analyst expectations by about 15 percent, according to Bloomberg data. In western Europe, profit has missed estimates by about 8.8 percent, the data show.

Analysts now expect companies in the Standard & Poor's 500 Index in the U.S. to post an annual profit decline of 9.5 percent this year, followed by an 11 percent rebound in 2009, Bloomberg data show. For Europe's Dow Jones Stoxx 600 Index, the 2008 estimate calls for a profit drop of 10 percent, with earnings growing 5.6 percent in 2009.

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

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U.K. Stocks Decline on Recession Concern; Shell, HSBC Slide

By Sarah Thompson

Nov. 19 (Bloomberg) -- U.K. stocks declined as investors speculated the global recession is worsening and oil and metals prices slid. Royal Dutch Shell Plc, Europe's largest oil company, and Rio Tinto Group dropped.

HSBC Holdings Plc led financial companies lower after Europe's biggest bank was downgraded to ``sell'' at WestLB AG, which cited further deterioration in the global economic outlook and a lower-than-average Tier 1 capital ratio.

The benchmark FTSE 100 Index slid 87.93, or 2.1 percent, to 4,120.62 at 12:28 p.m. in London. The FTSE All-Share Index decreased 2.1 percent and Ireland's ISEQ Index added 0.2 percent.

The FTSE 100 index has dropped 36 percent this year as asset writedowns and credit losses at financial companies topped $965 billion worldwide and sparked the worst banking crisis since the Great Depression.

The Monetary Policy Committee in the U.K., led by Governor Mervyn King, voted 9-0 to lower the rate to 3 percent, the central bank said in minutes of the Nov. 6 decision released today in London. Policy makers said that their forecasts implied the need for a reduction of maybe more than 2 percentage points.

``BOE minutes spells out what everyone already knows, the economy is struggling,' said Nick Brind, a London-based money manager at New Star Asset Management, which oversees about $25 billion. ``Investor sentiment is likely to remain in the doldrums.''

Shell lost 2.5 percent to 1,650 pence. Crude oil fell for a fourth day, dropping to its lowest in 22 months, on expectations U.S. inventories gained last week as fuel demand in the world's largest user declined.

Rio Retreats

Rio Tinto, the world's third-largest mining company, decreased 3.5 percent to 2,382 pence. Copper for delivery in three months on the London Metal Exchange fell as much as 1.7 percent to $3,688 a metric ton, and traded at $3,725 at 3:23 p.m. Singapore time.

HSBC, Europe's biggest bank by market value, slid 4.2 percent to 665 pence. WestLB said the lender's Tier 1 capital ratio, a measure of financial strength, is now 8.9 percent, which is less than the 10 percent average for the European banking industry, according to a note to clients dated yesterday.

The broker also slashed its price estimate on the shares 24 percent to 615 pence. Separately, UBS AG said the earnings prospects for European banks next year are ``dreadful.''

AstraZeneca Plc lost 4.7 percent to 2,673 pence. The maker of the Crestor cholesterol-lowering medicine, said the U.S. Food and Drug Administration granted approval for a generic version of the Pulmicort Respules asthma drug, rejecting some of the U.K. drugmaker's arguments put in a citizen's petition.

U.K. companies:

British Land Co. Plc (BLND LN) slid 10.5 pence, or 1.9 percent, to 533 pence. The U.K.'s second-largest real estate investment trust posted a second quarter loss after it was forced to write down the value of its shops and offices by 683 million pounds ($1.02 billion).

Business Post Group Plc (BPG LN) dropped 4.25 pence, or 1.5 percent, to 273. The postal company that handles a tenth of the U.K. mail market posted a 39 percent decline in first-half net income as it paid more tax.

Experian Plc (EXPN LN) climbed 36 pence, or 12 percent, to 342.5. The world's largest credit-checking company said first- half profit jumped 15 percent as it cut costs to offset declining demand for credit services in the U.S. and U.K.

Marks & Spencer Group Plc (MKS LN) declined 8.25 pence, or 3.9 percent, to 203. The U.K.'s largest clothing retailer fell for an eighth straight day as reports that the company plans a one-day sale added to concern over business in the lead-up to Christmas.

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

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Russian Stocks Sink as Reserves Dwindle, Oil Prices Retreat

By William Mauldin

Nov. 19 (Bloomberg) -- Russia's Micex Index fell the most in a week as the lowest oil price in almost two years added to concern the central bank may struggle to defend the ruble after spending $57.5 billion to prop up the currency.

The 30-stock Micex sank 7 percent to 537.39 at 2:32 p.m. in Moscow, after the bourse halted trading for an hour because of the declines. The drop was the biggest fluctuation among more than 80 benchmark indexes that Bloomberg tracks worldwide.

The central bank spent $57.5 billion propping up the ruble in September and October, Chairman Sergey Ignatiev said today, draining the world's third-largest reserves after China and Japan. Crude oil dropped to below $54 a barrel in New York.

``It's a vortex of despair,'' said Julian Rimmer, head of sales trading at UralSib Financial Corp. Russian stocks are weighed down by ``an economy rendered sclerotic by the vanishing of credit, a market paralyzed by margin calls and illiquidity, the opacity of earnings through 2009 and the ruble quivering while speculators circle,'' he said.

The central bank on Nov. 11 allowed the ruble to depreciate 1 percent again the dollar-euro basket of currencies, triggering a 13 percent decline in the Micex Index that day.

The currency may weaken to 35 against the dollar-euro basket by the end of next year, from about 30.7 yesterday, according to the median estimate of 16 currency strategists, economists and investors surveyed by Bloomberg.

`Pressure'

Crude oil for December delivery sank for a fourth day today, slipping as much as 2 percent to $53.30 a barrel in after-hours trading in New York, the lowest in almost 22 months.

``There is still a lot of pressure on the oil prices because of the slowdown in global demand,'' said Thomas Mundy, strategist at Renaissance Capital in Moscow. ``That doesn't encourage anyone to come back in Russia.''

The RTS Index retreated 0.7 percent to 597.31. The dollar- denominated Russian Depositary Index, a measure of Russian global depositary receipts trading in London, lost 4.8 percent. Energy producers dominate the three indexes.

Rosneft, Russia's biggest oil producer, sank 4.95 rubles, or 5.7 percent, to 82 rubles, a record low. OAO Lukoil, the second- biggest producer, fell 4.4 percent to 791.11 rubles.

Finance Minister Alexei Kudrin said the government has spent 90 billion rubles ($3.3 billion) out of a planned 175 billion rubles this year investing in domestic stocks and bonds. The 50- stock RTS is the third-worst national equity benchmark in the world in the last three months because of declines in crude and selling triggered by shareholders to meet margin calls from banks and brokerages.

Raw Materials

``The stock market, I think, is probably close to a bottom,'' Zeljko Bogetic, the World Bank's chief economist in Moscow, said in an interview. ``Now you're going to see a real impact biting on industry.''

The Micex is 4.9 percent above its low of 513.62 for the year, while the RTS is 8.7 above its low this year.

Metals companies and coal mining shares declined on the outlook for raw-materials prices.

OAO Raspadskaya, a Russian coking coal producer, dropped 8.9 percent to 1,903 rubles. OAO GMK Norilsk Nickel, the country's biggest mining company, sank 8.1 percent to 1,920 rubles as price of nickel lost as much as 3.3 percent in London.

For coal prices, ``we forecast an about 40 percent reduction in 2009 from the highs of this year's spot price, while our conservative long-term prices fall by 60 percent by 2012 from our average 2008 levels,'' according to Tim Dudley, a London-based analyst with Arbuthnot Securities Ltd.

Investment

Russia attracted 2.3 percent less foreign direct investment in the first nine months than in the year-earlier period as the global credit squeeze deterred investors from emerging markets.

Direct investment amounted to $19.2 billion and total foreign investment, including credits and flows into the securities markets, was $75.8 billion, almost 14 percent less than a year earlier, the Moscow-based Federal Statistics Service said in an e-mailed statement. Foreign investment in stocks and bonds fell 16 percent to $1.3 billion, it said.

AFI Development Plc, billionaire Lev Leviev's Russian real estate developer, climbed 2 cents, or 1.8 percent, to $1.15 at 11:06 a.m. in London. The company said in a statement that it will pay $200 million, or more than a third of the $569 million in cash it had on Sept. 30, as an interim dividend.

To contact the reporter on this story: William Mauldin in Moscow at wmauldin1@bloomberg.net.

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Stocks in Europe, Asia Decline on Earnings; U.S. Futures Drop

By Adria Cimino

Nov. 19 (Bloomberg) -- Stocks fell in Europe and Asia, led by chemical companies and financial firms, on concern the economic slowdown will cut profits. U.S. futures dropped after consumer prices slid the most on record, heightening the risk of deflation.

BASF SE, the world's largest chemical company, tumbled 17 percent after abandoning its target to match last year's profit. UBS AG slumped 5 percent as Morgan Stanley slashed its estimate for the Swiss bank's earnings by 23 percent, citing the possibility of more writedowns. Sumitomo Mitsui Financial Group Inc., Japan's third-largest bank, tumbled 7.9 percent on plans to raise capital.

The MSCI World Index lost 1 percent to 852.75 at 1:52 p.m. in London, extending this year's drop to 46 percent. More than $31 trillion has been erased from the value of global equities as the financial-market turmoil pushes countries from Europe and the U.K. to the U.S. and Japan into recession.

``We're in an uncertain environment,'' said Julien Quistrebert, an equity analyst at KBL Richelieu Gestion in Paris, which oversees $5.1 billion. ``The question is how long will the recession last and what will be the impact on companies.''

Europe's Dow Jones Stoxx 600 Index fell 2.7 percent. Rio Tinto Group, the world's third-biggest mining company, followed metal prices lower, slipping 3.8 percent.

The MSCI Asia Pacific Index sank 0.9 percent, while Standard & Poor's 500 Index futures lost 2.4 percent.

Deflation Risk

The cost of living in the U.S. plunged 1 percent last month, more than forecast and the most since records began in 1947, as fuel costs plummeted and retailers discounted automobiles and clothing to entice shell-shocked customers.

A recession that may become the worst in decades raises the risk that deflation, or a prolonged decline in prices, will be another hazard facing Federal Reserve Chairman Ben S. Bernanke and President-elect Barack Obama.

European Central Bank President Jean-Claude Trichet in a Sky News Television interview said the world is experiencing its worst financial crisis since the aftermath of World War Two.

Analysts have cut profit estimates for 48 percent of stocks they cover worldwide, the most in at least 15 years, and more downgrades are likely as the economy slows, JPMorgan Chase & Co. said. In Europe, 44 percent were downgraded, the study, which covers data since 1993, said.

U.S. companies reporting earnings this quarter have missed analyst expectations by about 15 percent, according to Bloomberg data. In western Europe, profit has missed estimates by about 8.8 percent, the data show.

BASF, UBS

BASF sank 17 percent to 21.18 euros after abandoning a target to match last year's profit level on slumping demand. The company said it will close 80 plants, according to a DGAP statement.

UBS, the European bank hardest hit by credit losses, tumbled 5 percent to 12.61 francs. Morgan Stanley cut its 2009 earnings estimate for UBS to 1.41 francs per share, from 1.83 francs, citing the possibility of further writedowns and projected wealth management outflows of 77 billion Swiss francs ($64 billion).

The Swiss bank has posted $48.6 billion in credit-related losses and writedowns, according to Bloomberg data. Losses by the world's biggest financial firms have topped $966 billion in the worst financial crisis since the Great Depression.

HSBC Holdings Plc, Europe's biggest bank, lost 4.9 percent to 667.5 pence. The stock was downgraded to ``sell'' at WestLB AG, which cited further deterioration in the global economic outlook and a lower than average Tier 1 capital ratio.

The brokerage reduced its earnings-per-share estimates for HSBC by more than 20 percent for 2008 to 2010.

ING Groep NV tumbled 8.8 percent to 6.50 euros. ING had its price estimate cut by 36 percent at Goldman Sachs Group Inc., which said the Dutch financial-services company faces ``significant headwinds'' in the medium term due to the credit and equity market ``dislocation.''

Sumitomo Mitsui fell 7.9 percent to 314,000 yen on a plan to raise 400 billion yen ($4.1 billion) to replenish capital as Japan's recession drives up bankruptcies.

Mining Stocks

Mining stocks retreated on concern the economic slowdown will hurt demand for metals, sending the Reuters/Jefferies CRB Index of 19 commodities down 0.6 percent.

Rio Tinto decreased 4 percent to 2,370 pence, and BHP Billiton Ltd., the world's largest mining company, declined 3.3 percent to 851 pence.

Gold declined for the second straight day on speculation that the slumping global economy will reduce demand for commodities, eroding the appeal of the precious metal as a hedge against inflation. Copper, nickel and tin fell in London.

British Land Co. slipped 2.9 percent to 527.5 pence. The largest office landlord in London reported a wider second quarter loss after writing down the value of shops and offices by 683 million pounds ($1.02 billion) in the credit crisis.

Lending Freeze

A freeze on bank lending has cut credit to most property borrowers, exacerbating falls in real-estate prices. U.K. commercial values are down 28 percent from the peak in June 2007, according to Investment Property Databank Ltd.

Central banks from London and Frankfurt to Washington and Tokyo have slashed interest rates and pumped funds into the financial system in an effort to unlock credit markets.

Reckitt Benckiser Plc, the world's largest maker of household cleaners, climbed 2.3 percent to 2,748 pence. Citigroup Inc. rated the shares ``buy'' in new coverage, citing ``substantial growth opportunities'' in consumer health care and ``resilience in developing markets, where Reckitt is well diversified.''

Experian Plc jumped 11 percent to 340.25 pence. The world's largest credit-checking company said first-half profit jumped 15 percent as it cut costs to offset declining demand for credit services in the U.S. and U.K.

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

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Metro, RIM, Scotiabank, Thomson Reuters: Canada Equity Preview

By John Kipphoff

Nov. 19 (Bloomberg) -- The following companies may have unusual price changes in Canadian trading today. Stock symbols are in parentheses, and share prices are from yesterday's close in Toronto.

The Standard & Poor's/TSX Composite Index added 0.5 percent to 8,835.73.

Bank of Nova Scotia (BNS CN): Canada's third-largest bank by assets said after the market closed that it will record pretax charges of C$890 million ($722.3 million) in its fourth quarter related to trading and eroding values for investments. The provisions will reduce profit by C$595 million for the period ended Oct. 31, the Toronto-based bank said. The shares rose 3 percent to C$37.17.

Canadian Oil Sands Trust (COS-U CN): The lead partner in the largest oil-sands miner said the owners of Syncrude Canada Ltd. decided to convert to a bitumen-based royalty. Starting Jan. 1, Syncrude will begin paying royalties based on bitumen product, less associated operating and capital costs, rather than on fully upgraded synthetic crude oil, Canadian Oil Sands said. The units fell 3.4 percent to C$24.74.

Metro Inc. (MRU/A CN): Canada's third-biggest supermarket chain said fourth-quarter profit rose 26 percent to C$72.3 million ($59 million), or 64 cents a share, from C$57.6 million, as a food-price war in Ontario abated and the retailer began renovating stores in the province.

Revenue in the three months through Sept. 27 climbed 1.8 percent to C$2.48 billion. Seven analysts estimated Metro would earn 61 cents a share on average, according to a Bloomberg survey. Three analysts' average estimate for sales was C$2.52 billion. The shares fell 0.8 percent to C$33.

Research In Motion Ltd. (RIM CN): The maker of the BlackBerry e-mail phone was added to Goldman Sachs Group Inc.'s ``conviction buy'' list. The shares gained 12 percent to C$57.92.

Thomson Reuters Corp. (TRI CN): The provider of financial, legal and medical data were rated ``hold'' in new coverage at Jefferies & Co.

Separately, the shares will begin trading today without the right to receive its $1.62 quarterly dividend declared Nov. 10. The payout may reduce the shares' price by an equal amount as they trade ex-dividend. Thomson Reuters fell 0.2 percent to C$29.13.

Western Canadian Coal Corp. (WTN CN): The company with mines in British Columbia was rated ``buy'' in new coverage at Arbuthnot Banking Group Plc. The shares fell 6.2 percent to 76 cents.

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

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LDK Solar, Research in Motion, Sunoco: U.S. Equity Preview

By Elizabeth Campbell and Whitney Kisling

Nov. 19 (Bloomberg) -- The following companies may have unusual price changes in U.S. trading today. Stock symbols are in parentheses, and share prices are as of 7:50 a.m. in New York, unless otherwise specified.

Eagle Materials Inc. (EXP US): The maker of gypsum wallboard reduced its quarterly dividend by 50 percent to 10 cents a share, citing the need ``to increase financial flexibility during these times of economic uncertainty.'' The stock rose 1.4 percent to $18.53 in regular trading yesterday.

KLA-Tencor Corp. (KLAC US): The second-largest U.S. maker of semiconductor equipment said it plans to cut about 15 percent of its workforce as customers curb orders. The stock lost 3.2 percent to $16.81 in regular trading yesterday.

La-Z-Boy Inc. (LZB US): The maker of living-room recliners withdrew the latest full-year earnings forecast, cut the quarterly dividend in half and announced plans to reduce 10 percent of the workforce. The stock jumped 11 percent to $4.95 in regular trading yesterday.

LDK Solar Co. American depositary receipts (LDK US) added 8.8 percent to $16.20. The Chinese maker of silicon wafers used in solar cells said third-quarter profit more than doubled, beating analyst estimates, on higher production and sales. The company also increased its forecast for expanding capacity by 100 megawatts to 2,300 megawatts next year.

Phoenix Cos. (PNX US): The insurer and money manager catering to wealthy clients said it applied for U.S. aid under the Treasury's Troubled Asset Relief Program and is considering acquiring a lender as part of the process. The stock fell 2.3 percent to $3.04 in regular trading yesterday.

Research in Motion Ltd. (RIMM US) rose 1.6 percent to $48. The maker of the BlackBerry e-mail phone was added to the ``conviction buy'' list at Goldman Sachs Group Inc., which cited the shares ``compelling valuation'' and the start of BlackBerry Storm sales on Nov. 21.

Royal Caribbean Cruises Ltd. (RCL US) fell 1.3 percent to $9.38. The world's second-biggest cruise operator said it will stop paying its quarterly dividend of 15 cents a share to save cash.

Sunoco Inc. (SUN US) declined 2.8 percent to $36.97. The largest refiner in the U.S. Northeast was cut to ``sell'' from ``hold'' at Deutsche Bank AG, which said crude prices will be affected by a combination of ``poor demand'' and ``major'' new refining capacity additions.

TiVo Inc. (TIVO US): The pioneer of digital video recorders said it will cut jobs to reduce expenses. The stock rose 1 percent to $6.07 in regular trading yesterday.

To contact the reporters on this story: Elizabeth Campbell in New York at ecampbell11@bloomberg.net; Whitney Kisling in New York at wkisling@bloomberg.net

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U.S. Stock Futures Slide as CPI Heightens Recession Concern

By Eric Martin

Nov. 19 (Bloomberg) -- U.S. stock-index futures retreated as the biggest decrease in consumer prices on record heightened concern that the recession is deepening.

JPMorgan Chase & Co., General Electric Co. and DuPont Co. led declines in Dow Jones Industrial Average stocks trading in Europe after the Labor Department said the cost of living slid by 1 percent in October, the most since records began in 1947. General Motors Corp. lost 6.1 percent as Chief Executive Officer Rick Wagoner said the auto industry needs federal aid to help it keep jobs and make it an engine for future prosperity.

Futures on the Standard & Poor's 500 Index expiring in December sank 1.7 percent to 851.4 at 8:37 a.m. in New York. Dow Jones Industrial Average futures lost 1.7 percent to 8,351 and Nasdaq-100 Index futures decreased 1.9 percent to 1,152.25.

Stocks fell in Europe and Asia as concern mounted the economic slowdown will cut profits at financial firms and commodity producers.

The S&P 500 has dropped more than 41 percent in 2008, on course for its worst year since 1931, as writedowns and credit losses topped $966 billion in the worst financial crisis since the Great Depression.

Profits fell 17 percent on average at companies in the index that have reported third-quarter results, according to Bloomberg data. Analysts expect a 9.5 percent decline in full- year earnings, based on estimates compiled by Bloomberg.

GM's Plea

General Motors retreated 19 cents to $2.90. Chief Executive Officer Rick Wagoner and fellow auto-industry leaders are urgently seeking a slice of the $700 billion government bailout package. The CEO told the Wall Street Journal he had cut costs and invested billions of dollars in fuel-efficient vehicles and technologies.

Congressional Democrats propose tapping the financial- rescue package for the aid. President George W. Bush and Senate Republicans said they oppose that approach and instead prefer using $25 billion that was earlier approved by Congress to retool auto plants.

Car company executives will today make their plea for government aid for the second day, as prospects for a Democratic-backed assistance plan waned. Ford Motor Co.'s Alan Mulally and Robert Nardelli of Chrysler LLC will join Wagoner to testify at a House Financial Services Committee hearing after telling a Senate panel yesterday that they need $25 billion to keep operating.

``Broad-based measures would be quite difficult in this current environment,'' Philipp Baertschi, a senior equity strategist at Bank Sarasin in Zurich, said in a Bloomberg Television interview. ``The stimulus probably should be more directed at homeowners because that is a bigger problem if house prices continue to fall rather than at carmakers.''

To contact the reporters on this story: Adam Haigh in London at ahaigh1@bloomberg.net; Eric Martin in New York at emartin21@bloomberg.net.

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Daily Financial Market Outlook

Daily Forex Fundamentals | Written by Lloyds TSB | Nov 19 08 07:48 GMT |

Overview & economic commentary The minutes of the Bank of England's 5/6 November MPC meeting and of the US Fed's 28/29 October meeting are published today at 9:30 and 19:00, respectively. We do not expect any surprises from either set of minutes - both decisions to cut rates are likely to have been unanimous and their tone will be bearish. But they are still expected to attract attention as market participants are widely anticipating further interest rate cuts next month so any events/speeches that could give hints of their size will draw focus. As well as the minutes, the US publishes consumer price inflation data for October which may come in lower than expected given the 2.8% monthly drop in producer prices released yesterday. The market median forecast is for a decline of 0.8% on the month and growth of 4.1% on the year compared with 4.9% in September. Core prices may have edged up 0.2% on the month, representing 2.4% growth on the year (2.5% in September). Should consumer prices come down more sharply than initially thought the Fed will be more likely to cut rates again and to hold onto negative real rates for longer. Also due, US housing starts and building permits for October will be weak after the NAHB index fell to a new record low of +9 in November. US Fed speakers today include Kohn and Lacker, speaking in Washington on the sub-prime crisis. In the UK, the CBI industrial trends survey for November is published - we expect a fall in the confidence balance to -45 from -39 in October. John Gieve, BoE Deputy Governor for Financial Stability and MPC member speaks at Regent's College in London at 18:40. Currency commentary Sterling held firm to this week's gains o/n and we see no immediate reason for selling pressure to immediately resume. The BoE MPC minutes should reveal a unanimous vote for this month's rate cut. There could be a surprise however with regard to the preference for a smaller cut by a few members on the MPC (Besley/Sentance?), but this should not have a major impact on how sterling reacts. £/$ is bid above 1.4950 but ideally should extend above 1.51 to restore some confidence. The decoupling of sterling with the trend in UK banking stocks is a noticeable change compared to this summer and suggests that developments in overseas markets may well dictate the next sterling move. US housing data is due this afternoon. £/yen retreated back below 145.0 o/n as Asian equities drop (except Shanghai). There was some reprieve from selling EM fx o/n following 3rd successive sessions of losses. €/zloty slipped back below 3.8250. Nok and C$ may take a lead from US crude oil inventories at 3.30. Major data and events today UK CBI Industrial trends survey (11:00) Oct -39 Nov (f'cast) -45 Median -41 Range -50:-35 US consumer prices (13:30) Sep zero Y-O-Y +4.9% Oct (f'cast) -0.8% Y-O-Y +4.1% Median -0.8% Range -1.2%:-0.1% US consumer prices ex-food, energy (13:30) Sep +0.1% Y-O-Y +2.5% Oct (f'cast) +0.2% Y-O-Y +2.4% Median +0.2% Range zero:+0.2% US housing starts (sa) (13:30) Sep 0.817mn Oct (f'cast) 0.780mn Median 0.780mn Range 0.744mn:0.87mn US building permits (13:30) Sep 0.805mn Oct (f'cast) 0.780mn Median 0.773mn Range 0.73mn:0.88mn Japan trade balance (BoP) (00:50) Sep +Y88.5bn Oct (f'cast) +Y70.0bn Median +Y71.8bn Range -Y250bn:+Y800bn Canada int'l secs transactions (13:30) Aug -C$0.7bn Sep (f'cast) -C$1.1bn Median -C$1.0bn Range -C$3.5bn:+C$1.0bn Bank of England publishes minutes of 5/6 November MPC meeting (09:30) Germany to auction 5yr notes (amount tbc) (10:15) US Fed members Kohn (14:00) and Lacker (18:30) speak in Washington on the subprime crisis BoE member Gieve speaks at Regent's College, London (18:40) US Fed releases minutes from 28/29 October FOMC meeting (19:00) US DOE publishes weekly oil inventory data (15:35) Chart of the day: Will yesterday's larger than expected drop in US producer prices for October be matched by a sharper than forecast decline in CPI inflation today? 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.

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Markets Stable ahead of FOMC Minutes

Daily Forex Fundamentals | Written by Crown Forex | Nov 19 08 07:42 GMT |

Today we see that the dollar is weak in the markets ahead of the FOMC minutes as yesterday Treasury Secretary Henry Paulson and Federal Reserve Chairman Ben Bernanke spoke regarding the $700 billion bailout plan but did not mention anything about the economic out or regarding interest rates. Also since the U.S. economy is scheduled to release housing data, this will further deteriorate the dollar in the market especially if the readings come in downbeat like projected to do so. The euro is gaining on the back of the federal currency as today the focus in the markets is on the housing data and the FOMC minutes from the U.S. economy since due to this will point out the direction of the dollar while the single currency takes the opposite way. The markets are trading in narrow ranges as the EUR/USD is currently trading at 1.2633 while recording a high of 1.2642 and a low of 1.2604. For the pair we see a support at 1.2600 while currently there is a sideway wave being formed. Like the euro, the pound is also trading in a sideways wave ahead of the data while the UK economy is scheduled to release their BoE minutes stating why interest rates were reduced by 150 basis points to 3%. The GBP/USD is currently trading at 1.4956 between the support of 1.4875 and the resistance of 1.4995 while recording a high of 1.4996 and a low of 1.4900. The yen was climbing versus the greenback due to anticipations in the market that U.S. legislation might not support automakers which crippled the demand for carry trades. Now we see the yen weakening against the dollar as the pair is trading at 96.95 while recording a high of 96.80 and a low of 96.31. For the pair we see a support at 95.85 and a resistance at 96.70. Crown Forex disclaimer:The above may contain information for investors/traders and is not a recommendation to buy or sell currencies, gold, silver & energies, nor an offer to buy or sell currencies, gold, silver & energies. The information provided is obtained from sources deemed reliable but is not guaranteed as to accuracy or completeness. I am not liable for any losses or damages, monetary or otherwise that result. I recommend that anyone trading currencies, gold, silver & energies should do so with caution and consult with a broker before doing so. Prior performance may not be indicative of future performance. Currencies, gold, silver &energies presented should be considered speculative with a high degree of volatility and risk.

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Forex Market Update: Equities Dance At The Edge Of The Precipice Again, But Decide Not To Jump This Time. USD And JPY Continue To Bide Their Time In N

Daily Forex Fundamentals | Written by Saxo Bank | Nov 19 08 07:40 GMT |

Is bond rally spelling trouble for risk appetite? TICs data shows huge move into USD in September. LATEST HEADLINES US Weekly ABC Consumer Confidence fell to -52 vs. -49 expected and vs. -50 the prior week New Zealand Q3 Producer Price Inputs/Outputs rose 3.7%/2.8% QoQ vs. 5.6%/3.5% in Q2 Australia Sep. Westpac Leading Index out at -1.0% vs. -0.1% in Aug. THEMES TO WATCH - UPCOMING SESSION UK BoE Minutes (0930) Australia RBA's Stevens to Speak (0935) EuroZone Sep. Construction Output (1000) UK CBI Nov. Industrial Trends (1100) Canada Sep. International Securities Transactions (1330) US Oct. CPI (1330) US Oct. Housing Starts and Building Permits (1330) US Fed's Kohn to Speak (1400) US Weekly Crude Oil and Product Inventories (1535) US Treasury's Kashkari to Speak on Bank Rescue (1730) US Fed's Lacker to Speak (1830) UK BoE's Gieve and Bean to Speak (1840) US FOMC Minutes (1900) Japan Oct. Merchandise Trade Balance (2350) Market Comments The latest rounds of inflation data are showing inflation decelerating even faster than anticipated. The UK CPI fell -0.7% on an annualized basis in a single month and the RPI fell at the fastest rate in 20 years. The headline US PPI fell a full percentage point in October, from 6.2% to 5.2%. The talk has quickly shifted to deflation, which is certainly a significant risk in the near term with powerful asset deflation, commodity deflation and plummeting consumer demand conspiring to compel a slowdown in inflation. The US Christmas shopping season will likely see retailers chopping prices deeply to get customers into the door and today Marks and Spencer, a large British Retailer, announced a one-day, 20% off everything sale. A look over at the white hot government printing presses and endless stimulus plans that are in the pipeline should reassure us that the last thing this will end with a few years down the road is deflation - as a reversion to inflation is far more likely eventually. For now, however, deflation reigns and the inflation data is a clear argument for the major central banks to all lower their rates to essentially zero in the coming quarters. This will continue to weigh on the carry trades and favor the USD and the JPY. Nervousness in equity markets was almost palpable yesterday. the S&P 500 toyed with the idea of testing the 818 low on the Dec. Future, but rejected the sell-off once again, this time ahead of the low, and rallied sharply into the close (after two days in a row of swooning sharply into the close - no easy patterns here.) Likewise, JPY crosses tested lower and the USD a bit stronger as a well before easing back after the rally in risk. The persistent rally in fixed income is giving the JPY a tailwind as falling interest rate spreads between the rest of the world and Japan tend to do. So as consolidation ranges constrict in EURUSD and EURJPY and the market wrings its hands wondering what to do next, we wait and watch the major equity index levels for signs that a new meltdown is in the works, which is still our preferred scenario until proven otherwise. This would trigger a new leg up on the USD and the JPY. 8000 on the Dow cash index and that 818 level on the S&P500 future are interesting levels to watch. For the major currency pairs, pull up a daily chart and a 21-day simple MA, which has become the latest obsession whether you are looking at EURUSD, EURJPY, USDJPY, or AUDUSD. In the absence of directionality over the last several days, this technical level has become an intense focus. The danger is that it suddenly becomes worthless as we suspect that it is a bit of a self-fulfilling technical level at this stage. Once real flow hits the market due to a new capitulation in equities or a huge rally instead, the MA will fade in importance. Still a break above this level and a hold into the close would be a significant technical development here and now. The US TICs data showed a huge growth in USD positive flows and the October number is likely to be much larger. The number reflects changes in banks' dollar holdings and a range of other net capital flows into the USD, including the net purchase of $66 billion in long-term US securities. Unfortunately, the data is released so long after the fact that this number usually only helps to explain why certain moves happened for the month in question. Be careful out there, the potential for volatility is every bit as high as it has been at any part of the recent cycle and the relative calmness we have seen of late could be the calm before an intense new storm once these ranges fall. Analysis Disclosure & Disclaimer SaxBank A/S shall not be responsible for any loss arising from any investment based on any recommendation, forecast or other information herein contained. The contents of this publication should not be construed as an express or implied promise, guarantee or implication by SaxBank that clients will profit from the strategies herein or that losses in connection therewith can or will be limited. Trades in accordance with the recommendations in an analysis, especially leveraged investments such as foreign exchange trading and investment in derivatives, can be very speculative and may result in losses as well as profits, in particular if the conditions mentioned in the analysis dnot occur as anticipated. SaxBank utilizes financial information providers and information from such providers may form the basis for an analysis. SaxBank accepts nresponsibility for the accuracy or completeness of any information herein contained. Any recommendations and other comments in SaxBanks analysis derive from objective fundamental macreconomical and company specific calculations, statistical and technical analysis, and subjective general market assessment. If an analysis contains recommendations tbuy or sell a specific financial instrument, such recommendation should be seen as SaxBanks opinion that the specific instrument will respectively outperform the relevant market or underperform compared tthe market. SaxBanks recommendations should statistically correspond tan even distribution between buy and sell recommendations. The recommendations may expire promptly due tmarket volatility and in general, SaxBank does not anticipate its recommendations tbe valid more than one month. An analysis will be updated if and only if a market development or other issues relevant tthe analysis render a new analysis on the same topic relevant. SaxBanks analysis does not cover any specific financial product over time but only products which SaxBanks strategy team finds it important tcover at any given point in time. In order tprevent conflicts of interest, SaxBank has established appropriate business procedures, incl. procedures applicable tresearch and analysis tensure objective research reports. SaxBanks research reports have not been discussed with the parties, e.g. issuers of securities, mentioned in the analysis. SaxBank is under supervision by the Danish Financial Supervisory Authority. SaxBank does not engage in corporate finance activities and accordingly, SaxBanks employees, incl. the persons responsible for an analysis, dnot receive remuneration associated with investment banking transactions.

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